The Latest 'Insider Trading' Scam

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The FBI has
raided several firms with charges of "insider trading,"
claiming that "expert networks," have given "non-public"
information to clients working in mostly hedge funds and mutual
funds, according
to
the Wall Street Journal. I had never even heard of
"expert networks" until this latest example of why there
should not be a State-monopoly in law and justice.

According to
the Journal, expert networks are companies that "set
up meetings and calls with current and former managers from hundreds
of companies for traders seeking an investing edge."

Yeah, so?

Jeepers, it's
too bad that the government's monopoly in law and justice has created
a criminal racket in and of itself in the business of persecuting
people for behaviors that harm no one. Usually, a "crime"
is something in which there
is a victim
.

But this sure
is bringing back memories of when former New York U.S. attorney
and horse's ass Rudy
Giuliani
was persecuting financier Michael Milken. What was
Milken's crime, and who were his victims, Mr. Giuliani? Milken's
crime was making a lot of money, but some public "servants"
such as Rudy didn't like that.

The welfare
state in America has created generations of people, especially those
who feed at the public trough, who feel great resentment and envy
toward someone who gets rich honestly (as opposed to getting rich
by feeding at the public trough). In fact, Milken wasn't even involved
in "insider trading," according
to
Milken's website, which clarifies the many myths surrounding
Giuliani's persecution of Milken.

In the current
situation, the expert networks allegedly acquired information from
present and former managers of various companies, and then gave
the so-called "inside" information to clients who then
made investments accordingly. But neither the expert network people
nor their clients are alleged to have committed any actual acts
of theft or fraud. Did the networks steal the information? Did they
engage in any acts of trespassing or breaking and entering to acquire
that information? Apparently not.

To me, and
to most people who really have any actual understanding of ethics
and morality, in a land of freedom, which ours was meant to be but
obviously isn't, the only categories of acts that should be considered
"against the law" are theft, trespass, fraud and actual
physical aggression against others. It's all based on the same kind
of private property rights that the American Founders (at least,
most
of them
) believed in. That was what America was to be
based on.

Libertarian
author Tibor Machan, who wrote about the feds' persecution of Living
entrepreneur Martha Stewart for so-called "insider trading,"
noted
that

If one learns
of something from a friend or overhears a conversation or obtains
the knowledge via a psychic, there is nothing wrong with making
a profitable move that others hadn't had the chance to make…

This, by
the way, is so elementary that it is amazing that more editorialists
and pundits do not make note of it. After all, in the newspaper
business a great deal hinges on scooping the competition. Indeed,
reporters receive prizes for doing this, namely, jumping ahead
of the crowd with information only they got a hold of so as to
score! They and their editors should be especially keen on condemning
federal insider trading laws — by the logic of such laws, scooping
would have to be prohibited…

Insider trading
laws aim to mimic rules of golf, baseball and football, all of
which aim to even things out between competitors. But this isn't
because it is unfair to have an advantage, not at all. It's because
the fans wouldn't like a contest in which the same folks — individuals
or teams — keep winning. So, to make things interesting, rules
are introduced that will mix things up a bit.

Finance,
however, is not a game! Its aim is to secure prosperity, economic
success. And that requires savvy, acumen, not bending over backwards
to please one's competitors.

Unfortunately,
with the government's monopoly on law and justice, we now have a
Justice Department, FBI and others among the royal bureaucracies
with investigations and persecutions of innocent businessmen who
are not committing actual crimes, while the bureaucrats seem to
be ignoring the widespread egregious fraud that has allegedly been
going on with the banks in what is probably the biggest foreclosure
fraud scandal in America.

"But that's
too difficult for us," the sainted crime bureaucrat exclaims.
"Going after people who are minding their own business is much,
much easier for us. Gimme a break!"

Well, right
along with what I see as our desperate need to get rid of the current
federal monopoly in national security, which so much evidence from
the past century and current times suggests is making us less secure
and less safe, so should we also get rid of the government's monopoly
in administering law and justice.

The biggest
mistake the Founders made was to allow agents of that centralized
institution in Washington called the federal government to be above
the law. Given a monopoly in anything, and with the power of compulsion
over others and the power to be above the Rule of Law, and given
human nature, the monopolists will act not in the interests of justice
or the interests of "clients" — the plaintiffs or the
accused — but will act in ways to feed their egos, gain financially
and/or further empower the State.

Like the monopoly
in national security, in which we clearly see the road to totalitarianism
via the TSA, the federal government's monopoly in law and justice,
with ever-accumulating power and control over just about every aspect
of life, is also exhibiting a more Soviet
style
of justice than ever before.

While it may
sound absurd to some people, we need to take the power of monopoly
away from the government, and that includes the business of law
and justice
. As Hans-Hermann Hoppe noted,
the pressures of competition under the Rule of Law is what would
motivate those working in the "justice industry" to actually
serve the public, certainly better than the existing compulsory
monopoly does.

As Future of
Freedom Foundation President Jacob Hornberger suggested,
when he wrote about the Securities and Exchange Commission's persecution
of Mark Cuban,

There is
really only one solution to this tyranny and oppression, and it's
not one that involves "reform": Abolish the SEC, one
of the most tyrannical, destructive, useless agencies in American
history, and repeal all economic regulations, including insider-trading
laws. Or to put it another way, restore free enterprise — that
is, enterprise that is free of government control — to our nation.

And finally,
for a much more accurate perspective on the current insider trading
fiasco that the feds have initiated against people whose only crime
is making an honest living, CNBC's John Carney gives the bottom
line
:

Mobsters
and terrorists have genuine victims, often easily detectable by
their corpses; while the victims of insider trading are far harder
to detect. That should be the starting place in any story about
government enforcement; who is the victim? When it comes to insider
trading, the victim is so hard to detect that it’s far easier
to suspect that it may not exist. The victim of insider trading
is a Snuffleupagus, someone visible only to the Big Birds behind
government desks.

Scott
Lazarowitz [send him mail]
is a commentator and cartoonist at Reasonandjest.com.

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