Mark I predicted the future, Mark II makes it! That’s what Pinkers calls bold decision making. Now we know, because he knows! The Terminator has spoken: No inflation for at least another year. Phew. Thank God for that. Any doubts? Forget it. Even the FT, “Without fear and without favour”, congratulates Mr Carney on his “salutary change of mind”. No more statistics, no more number crunching. From now on, it’s all plain sailing.
Sorry Pinkers, it’s time to eat your bowl of humble pie… having predicted a rise in interest rates, this year. Or perhaps better pick up the telephone and ring 999: Speed dial for Dr Andrew Sentance?
Insider trading is the trading of a public company’s stock or other securities by individuals with access to non-public information about the company. It’s illegal. This week, US authorities notched up another victory against Wall Street corruption when Mathew Martoma, a former portfolio manager at SAC Capital, was found guilty of conspiracy and security fraud. Mr Martona is the 79th person convicted of insider trading charges brought by the US attorney’s office since 2009.
It is generally accepted that wolves don’t have any natural predators, so is there hope that at least the ‘Wolf of Wall Street’ has finally met his match? Pinkers isn’t so sure. All the cases that have resulted in successful convictions so far share the same rather plebeian and familiar methodology.
Post crash insider trading has become by far more sophisticated than just ‘money for info’. The new wolves of Wall Street are dressed in the finest sheepskin money can buy, deploying increasingly complex and refined methods to circumvent existing legislation and leaving authorities impotent in the process.
A fascinating case is that of UK online video company Blinkx which lost almost half of its value last week following the publication of a blog by high profile Harvard academic Prof Ben Edelman. Entitled The Darker Side of Blinkx, it claimed that Blinkx had links with companies that used “deceptive tactics” to take fees and referral commissions. The news of Mr Edelman’s research quickly spread in investor chatrooms and trading floors, causing the company’s share price to collapse and wiping off hundreds of millions of pounds of its value. So far so good for Edelman and bad for Blinkx. But are the tables about to be turned? On Thursday, Prof Edelman disclosed that his research had been paid for by “two US investment firms”. This admission, which follows the build-up of short positions worth almost 15% of Blinkx, has raised serious concerns that his blog was not independent. Edelman insists that he has done nothing wrong and was “grateful that investors were willing to pay for some of my time…”. Blinkx and other parties have now cried foul and reported the respected Harvard academic to the Financial Conduct Authority for alleged market manipulation. According to reliable sources, the regulator is currently examining the complaints but has not yet begun an official investigation. Legal experts, however, believe this could be a classic case of ‘trash and cash’. The crucial question is whether or not the investors who backed the research had a short position open in the knowledge the research would be published.
Whatever the outcome, the case raises a number of relevant issues, notably the cosy and sometimes dubious relationship between high-end academia and the shady world of hedge fund country.