ToTransferOrNot wrote:"Synergy" is a highly desireable trait that drives a huge portion of corporate mergers, essentially all vertical/horizontal integration, and drives gains in efficiency and, ultimately, social good.
"Insider trading" is a judicial construct based on a rule promulgated by the SEC.
How one is even remotely related to the other is completely beyond me.
And yes, I have read a fair amount about the Goldman case, given that I'm currently in Fed. Reg. (not that that makes me an expert, or even particularly knowledgeable, it does mean I know more than 0). To say that their buisness practices are "clearly" illegal is absurd. To say that the SEC might win or force a rather large settlement and a consent decree--more reasonable. The thing is, essentially every large bank takes similar actions. Query whether the changes the SEC wants to force are actually going to result in greater disclosure/more transparency, also query whether, even if the changes do result in more transparency and disclosure, whether the overall cost to the economy will be worth it.
The "synergy" that allows their different investment departments to be so profitable stems from their organization having access to so much non-public information. Using non-public information obtained from a member of a public corporation to profit via trading stock is illegal and called "insider trading." This is how these are related.
I'm really not trying to get into a war of words here, just explaining why I said what I did, and why I consider Goldman Sachs to be an evil, evil entity (with the exception of their public bonds department).
lol. No, the synergy does not come completely, or even predominently, from trading on non-public information. hth. What an absurd statement. Players in every industry look for efficiency gains. In finance, those gains can come from lowered transaction costs in the various stages of investment intermediaries, lower information costs, ability to drive harder negotiations due to market power, etc. Provide support for your ridiculous assumption that even a significant portion of profitability gains come from breaking the law, thanks. Sure, if they could get away with it on a systematic level, they would, but even the SEC isn't alleging rampant insider trading violations by Goldman.
As far as rules against insider trading being controversial: not really. Unless you believe in strong-form market efficiency, insider trading undermines the integrity of the market, which undermines the entire efficient market hypothesis, which undermines essentially everything fiscal conservatives support. Very few credible economists on either side of the aisle support a strong-form efficiency model, mostly because it is retarded and blatantly wrong. Many economists believe the current rules are too restrictive, particularly the private action rights, but you're not going to find many people outside of the batshit-crazy Epsteins of the world who believe that insider trading is A-OK.