Recently there’s been some discussion about regulation and improving oversight of our global markets. Of course bankers and would be capitalists scoff at the notion. Why would we want to regulate a free market?
In what seems to be a massive legal loophole being exploited for the gains of insiders with privileged information at publically traded companies, the existence of the JP Morgan PrISM program provides compelling reasons to closely examine the way banks and brokers handle securities and favor their biggest clients at the expense of everyone else.
The creation of a legally rigged market alienates and burns most average market participants, whether they are traders or long term investors. If insiders are allowed to freely trade their company’s stock with privileged information, where is the incentive for any other person to participate?
Anyone who would knowingly lie, cheat and steal in this manner undermines the very system that allowed them to accumulate wealth and operate a business. These individuals deserve to be held accountable for their actions, especially now that the world knows how disruptive this level of fraud can be. What we’ve seen with AIG, Citigroup, Bernie Madoff and the rest of the firms and individuals is nothing short of a cataclysmic blow to free market capitalism. To restore some level of trust we need to see a lot more folks than just Mr. Madoff going to prison, not passing go and paying BACK the $200 (or however much bailout/bonus/fraud money they received).
Just how many banks have a PrISM-like insider trading system much like JP Morgan? With cockroaches you know that there’s always more than one. I feel this scenario plays out much in the same manner. More banks will have whistleblowers reveal that they also have insider trading and other very unethical programs.
Just how many money managers try to avoid doing their homework and try to cheat the system by getting insider information? How many will be investigated by the SEC and actually be arrested? Will the SEC reinvigorate itself to return as the sheriff of Wall Street or will this administration create a new, larger and more overbearing regulatory apparatus? More importantly, will the crooks go to jail?
Or will we keep the status quo? A revolving door between the SEC and Wall Street where former officials are given cushy jobs as legal counselors or advisors. This massive conflict of interest includes members of the Madoff family working for the SEC and Bernie himself being a paid advisor for several years, helping to shape policy for the agency that was supposed to watch out for people like him!
I say we close all the loopholes and start prosecuting the crooks post haste. No one deserves another breath of fresh air or moment of freedom if they are directly responsible for lying, cheating and stealing our system in to near collapse.