[star]The American Mind[star]

October 28, 2003

SEC's Cold Shoulder

The SEC has frozen the accounts of an ex-FleetBoston employee on grounds that insider trading took place around the announcement of the company's merger with Bank of America. Here's the kicker:

[Guillermo Garcia] Simons has apparently not worked for FleetBoston within the past year.

It's kind of hard to be an insider if you're not inside. I know, I know. Anyone who trades on information not provided to the public can be considered an insider trader. That just shows the law in its current form is goofy.

So, because the SEC was afraid "that the assets could leave the country" they got a judge to freeze an entire family's accounts. This isn't justice. It's called being guilty until proven innocent.

The lesson to be learned is not to act on any hot tip even if you think the tipster isn't an "insider." Acting on it could set you up for a showdown with the SEC. Also don't buy any financial instrument in a large enough amount to garner notice.

"SEC: Ex-Employee Knew of Merger" [via Eugene David]

Posted by Sean Hackbarth in Economics at 11:30 PM | Comments (0)