Thread by @asymmetricinfo

Are those raindrops I feel? Is that a storm coming?

Oh yes there is! A TWEETSTORM!

Topic du jour: Chris Collins and the terrible, horrible, no good, very bad insider trading allegations.

washingtonpost.com/blogs/post-par…

So for starters, let's just take a minute to ponder the utter insanity of what is alleged. Stroll around it. Meditate on the details. Crane our necks in awe.

Ready?

Allegedly, Collins encourages his family to invest in this firm, Innate, of which he is a board member. His son buys a lot of stock. Also, this tip percolates through the familial network, as such tips are wont to do. Son's fiancee buys stock. Future father-in-law buys stock.

Other family members and friends, cunningly known in the indictment as "unindicted co-conspirators", also allegedly buy stock, though maybe not as much.

During all this alleged stock-buying activity, the co-conspirators allegedly make sure to send each other electronic communications, easily subpoena'd and retrieved, assuring each other that Rep. Collins will of course warn them if there's any danger of their losing money.

Which, allegedly, he does! As soon as the company's multiple sclerosis drug hits the skids in its Phase Two clinical trial, the government says Collins got on the phone to his son to warn him to sell. Which of course he does, before warning everyone else to sell, too.

Again, much of this allegedly happens in electronic format, so that the government will not have to go to the trouble of asking you to *remember* what, exactly, you said when you were discussing your illegal scheme to commit securities fraud.

Now is my opportunity to use a quote that did not make it into the column, from the same securities lawyer who opened it for me: "Insider trading is the stupidest crime anyone can do because the authorities are so good at catching it".

But this refers to ordinary insider trading, where seasons professionals make some token effort to conceal what they are doing, and then their efforts aren't enough to keep authorities from noticing the trades, and putting them in jail.

What the government says Collins did is ... words fail. If you are a board director of a firm that just had a major, company-breaking announcement, there is a 100% chance that regulators are going to be watching trading around the announcement date.

There is a 100% chance that if one of the people whose trades show remarkable prescience HAS THE SAME LAST NAME AS YOU, authorities will be paying you a visit! Many visits! Until they stop visiting, because you are in jail, and they get to see you all day!

And if that person tells other people with whom they have a close personal relationship ... well, your chances of going to jail don't go up, because chances can't be higher than "Absolutely, indubitably, no-foolin' definitely going to happen.

But you've definitely increased the odds that the family's next Thanksgiving dinner will be held in the pokey. And no one will be wearing a "Visitor" badge.

This is actually the thing that makes me most doubt the government's case, because what's the point of doing something that literally cannot succeed? It's like robbing a liquor store across from police headquarters.

It would be faster, more convenient, and less stressful just to politely request that the FBI arrest your whole family.

Anyway, I needed to get that off my chest. Reading the indictment left me frankly awestruck.

Now, as to the meat of the objections I encountered. These came in 3 broad flavors:

1) Folks who read the headline, but not the column.
2) How could you even ASK whether insider trading is WRONG?!
3) How can you say we shouldn't do anything about insider trading?

First category: Yes, 800 words takes a little time to stop and read. But it probably takes less time than you spent writing an angry response to a completely imaginary column. If you read what I wrote, you could get angry about that, and then we'd be having a discussion!

Second category: because we should rigorously interrogate our moral intuitions! Often, after doing so, we will discover that those intuitions are correct. As in this case, where, you will note, I concluded that insider trading does cause harm--just not the harm most people think.

(I think many of the people who were angriest read some of the column, but not all of it, so they saw the parts where I pointed out that insider trading doesn't operate like we intuitively believe, but stopped before I got to the harms it does cause.)

3. I absolutely didn't say we shouldn't do anything about insider trading. If Collins did what is alleged, he did something immoral and wrong, and deserves to go to jail.

I just noted that thereare other institutional practices that cause the same kinds of harm, but are legal.

And we should do something about that stuff, because collectively, it's a much bigger problem than whether Cameron Collins got a lifeboat out of a failing company that other investors didn't have. Which would be, to reiterate, a big problem.

Which brings us to the end of the Tweetstorm. The sun is out, and it's a Friday afternoon. Go have a great weekend! (Right after you read the column) washingtonpost.com/blogs/post-par…