Don’t Think Wall Street Crime Is Different Than Other Crimes

Posted by | August 5, 2013 19:48 | Filed under: Top Stories

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by Stuart Shapiro

Last week a criminal indictment was handed down against the hedge fund SAC Capital Advisers for insider trading.  Paul H. Robinson explains how this may change the dynamic on Wall Street . . .

Some Wall Streeters have even challenged the notion that insider trading is a crime at all, claiming it doesn’t have any victims. In their view, insider trading is different from “real” theft, such as stealing a car. Real theft is genuinely despicable, they might agree, while insider trading is a mere violation of a made-up rule. . .

The only realistic means of getting compliance is for the culture to change. There was probably a time when drunk drivers or wife-beaters felt comfortable privately laughing about their behavior among their peers. In fact, the government alleges SAC employees were part of a company culture in which their illegal conduct was accepted, encouraged and rewarded.
What we need to create is a culture in which the insider and the trader fear social approbation at even the hint that they might be open to colluding, a culture in which friends, family and colleagues are as ashamed of such lawbreakers as they would be of a car thief. Criminal prosecution of insider trading, even when there is no body to jail, is the only practical way of getting people to think differently about the moral character of the conduct.
Let’s hope that this is the start of an era when getting “tough on crime” means getting tough on all crime, including white collar crimes.

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Copyright 2013 Liberaland
By: Stuart Shapiro

Stuart is a professor and the Director of the Public Policy
program at the Bloustein School of Planning and Public Policy at Rutgers
University. He teaches economics and cost-benefit analysis and studies
regulation in the United States at both the federal and state levels.
Prior to coming to Rutgers, Stuart worked for five years at the Office
of Management and Budget in Washington under Presidents Clinton and
George W. Bush.