Distinction Fail

Get and maintain wealth by using your high-level business connections to game the system?  Possible criminal:

By all appearances, Raj Rajaratnam was a self-made billionaire, having built Galleon Group into a giant hedge fund with a specialty in technology companies.

But prosecutors said on Friday that he had profited not from his trading genius but from his Rolodex, and they arrested him on charges of conspiracy and securities fraud in what they called the biggest insider trading scheme ever involving a hedge fund.

In all, six people were arrested, accused by prosecutors and the Securities and Exchange Commission of earning more than $20 million from illegal trading in companies like Google, Akamai and Hilton Hotels over nearly three years.

Even now, after the discovery of Bernard L. Madoff, the scheme outlined by law enforcement officials is the stuff of Wall Street thrillers, not seen since the days of Ivan Boesky two decades ago. Mr. Rajaratnam is accused of tapping a vast network of informants across a swath of corporate America: a senior official at I.B.M. considered a contender for the top job at that firm; executives of Intel and the consulting firm McKinsey & Company; two former Bear Stearns employees who had moved to a hedge fund, New Castle Partners; and an analyst at Moody’s Investors Service.

Get & maintain wealth by using your high-level business connections including members of the government to game the system?  Sure thing, go ahead!

If the alleged regulatory standard in finance was applied evenly, there’d be a lot more CEOs wearing handcuffs, and government agents would basically have to frog-march themselves right behind people like Raj.  After all, if the issue is profiting from your connections, then whether hidden or overt makes no difference, as the entirety of Wall Street does this.  No, enforcement is a matter of convenience, throw the occasional bone & hope the rubes take it & shut up.

Yet still they wonder why people conclude the problem is the system itself rather than particular players…

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About b-psycho

Left-libertarian blogger & occasional musician.
This entry was posted in economics, law. Bookmark the permalink.

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