The Rich get Richer…
Same story, different day. The New York Times has a story suggesting that there ahas been an increase of insider trading leading up to mergers. Analysis of the mergers in the last 12 months revealed that stock of 41% of the companies receiving bids saw abnormal trading in the days and weeks leading up to the announcement. Sounds kind of suspicious!
Why is the article on this blog? One of the principles of Catholic Social Justice is “Economic Justice”. No one is allowed to amass excessive wealth when others lack the basic necessities of life.
It is sometimes argued that this type of insider trading is a victimless crime, i.e. that Martha Stewart got in trouble for doing the same thing that goes on everyday. Unfortunately that is probably true. But that doesn’t make it right. It doesn’t work when my kids use that excuse; it shouldn’t work for a white-collar criminal either. It is a reality that if someone is making money off of this information; someone is else is losing money because they do not have the information.
Additionally, many of these mega-mergers result in folks losing their jobs, benefits, etc. Here lies the key to the issue. One individual is using information that is only had by a few to make a profit when others are going to be negatively impacted by not having access to the same information.
Discussion Area - Leave a Comment