Several weeks ago, I went to go meet a criminal. Yes you read that right! Garett Bauer, a former investment banker and prop trader on Wall Street came to the Ross School of Business to speak about the dangers of insider trading. Caught in a conspiracy that included not only insider trading, but obstruction of justice, and money laundering, the government claimed that he ran away with over $37 million. And for this he is most likely going to be getting between 11-13 years in prison.
The reason for his somber talk with us (besides hoping to lessen his sentence) was to show us the hazardous effects of playing outside the rules of the game which in this case is the law. We have all been taught since we were very little the merits of good and bad, right and wrong...but Bauer was specifically here to tell us how quickly these lines get blurred in a world that is more gray then black and white. And though life may seem like fun in games in the thick of the moment, the consequences for breaking the rules are anything but that.
For those of you who don't know, insider trading is basically where an individual or corporation engages in stock trading using information that is not public knowledge. If they have access to this "insider" information, this then gives them an unfair advantage in the stock market in comparison to the rest of the public. It would be like going to a casino and engaging in card-counting in order to beat out your opponents. In theory it may seem like you are just using your skills to get you an advantage in a situation, but in reality its cheating.
Though Bauer was very much remorseful, there was still a part of him that felt the laws of insider trading were too vague and the punishment too harsh. Because his partner in the scheme was the one to confess to the police, he earned a reduced sentence with very little jail time if any. Bauer on the other hand was subjected to the full punishment based on the $37 million number that the government has come up with. Yet Bauer claims that the government only counts profits and doesn't take into account the losses from the trading and that overall he ended up losing more money than he ever made.
What really happened was he lost a huge chunk of his life because he wanted to bypass the magic circle and didn't acknowledge the consequences.
The reason for his somber talk with us (besides hoping to lessen his sentence) was to show us the hazardous effects of playing outside the rules of the game which in this case is the law. We have all been taught since we were very little the merits of good and bad, right and wrong...but Bauer was specifically here to tell us how quickly these lines get blurred in a world that is more gray then black and white. And though life may seem like fun in games in the thick of the moment, the consequences for breaking the rules are anything but that.For those of you who don't know, insider trading is basically where an individual or corporation engages in stock trading using information that is not public knowledge. If they have access to this "insider" information, this then gives them an unfair advantage in the stock market in comparison to the rest of the public. It would be like going to a casino and engaging in card-counting in order to beat out your opponents. In theory it may seem like you are just using your skills to get you an advantage in a situation, but in reality its cheating.
Though Bauer was very much remorseful, there was still a part of him that felt the laws of insider trading were too vague and the punishment too harsh. Because his partner in the scheme was the one to confess to the police, he earned a reduced sentence with very little jail time if any. Bauer on the other hand was subjected to the full punishment based on the $37 million number that the government has come up with. Yet Bauer claims that the government only counts profits and doesn't take into account the losses from the trading and that overall he ended up losing more money than he ever made.
What really happened was he lost a huge chunk of his life because he wanted to bypass the magic circle and didn't acknowledge the consequences.
It's interesting that when we talk about the Magic Circle, it's almost as if cheating is okay, or at least it's better than not playing the game at all. Here's an extreme case of how cheating the law, one may say the most important daily game we play, can land a man in jail for 13 years. Where do those lines become grey? The Enron executives certainly faced a similar feat, all because they thought they could get ahead in the game of business. Really they were just screwing themselves over in the game of law.
ReplyDeleteThis is a great example, it's clear for many of these ponzi scheme or insider trading individuals have their lines blur when the opportunity to make massive amounts of money comes into play, and they feel nobody would notice if they cheated to satisfy their greed. The key word I feel is "greed" in the entire situation. If money didn't get you anything in life, I feel almost all, if not every single person who engages willingly in insider trading, a ponzi scheme, or any other type of violation of the law in order to gain monetary benefits would not do so. It's to the point that CNBC has a t.v show called "American Greed" http://www.youtube.com/results?search_query=american+greed+full+episodes+2011&oq=american+greed&aq=1&aqi=g10&aql=&gs_sm=3&gs_upl=1501l3869l0l5746l14l14l0l4l4l0l118l744l9.1l10l0
ReplyDeletepeople are driven by greed, and I'm not sure how it can be resolved if it ever can be, it almost seems as if it is an inevitable bad trait that is simply instinctual, for all, but most people have enough morals to know regardless of the benefits, cheating and violating the law is not an acceptable behavior.