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Former investment banker Carol Roth on the use of proprietary information in today’s market and whether it is criminal.
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Well it just might be the biggest insider trading -- of all time as they -- capital partners founder Steve Cohen of being investigated in connection.
Where -- two point 76.
Billion dollar insider trading scheme joining us now is former investment banker Carol -- up Carol first of all let's talk about insider trading in general.
A lot of people wonder it depends of the prosecutor what insider trading is do you know can you define clearly forming what insider trading is.
-- and I'll I'll go ahead and basically it's any thing where there is -- trade.
On material nonpublic.
Information that information that the general public.
Wouldn't have access to -- let me let me stop it right here -- Carol.
If that is so.
What about a Warren Buffett said.
I'm not picking a war -- -- he's a great investor he makes money for for the entire economy but.
He gets a private meeting with Tim Geithner back and it back at the height of the financial prices.
Tim Geithner tells -- stuff about Goldman Sachs that kind of assures him that investment in Goldman Sachs might be worth -- he ends up making -- two billion dollar profit from that investment.
Could that not be considered from your definition to be insider trading.
I think that's the crux of the issue it's very difficult to decide what's proprietary research.
And what is it material non public information.
And I'll take -- a step further day that I'm not sure that insider trading and having that information -- even a bad thing.
If you think about the crux of the markets what is it that makes a market efficient it's getting information into that market as quickly as possible so the goal for all the players involved this to have as much information in the market to be able to trade out of then -- the incentives to get insider information would do that and expedite.
That rock here welcome my time Carole king and Anguilla higher.
-- -- -- -- -- -- -- -- -- -- -- -- -- -- What you're saying here's the problem with what you're saying.
You take away.
Any semblance.
Of an even playing field for individual investors -- to review the facts of this particular case that's -- the cross hairs right now.
What essentially happened.
Is that a drug coming to market to cure alzheimer's.
There was information about whether.
It was doing what -- there was affected.
And that information was leaked to one of the nation's biggest.
Trading.
In to take hedge -- right.
And this was she -- this is a total -- there is no question whether this is this an efficient market are you kidding me.
Nobody else would have had access to that information this was proprietary information -- This is international investors are getting hurt in this and this is why well then how Jerry and they're not investing.
Because they don't believe in this market -- garden haven't -- -- And Syria that the question is the other side really getting hurt by not having an adaptation and aren't -- -- -- -- getting that information on a little late this I -- -- can you this guy made 200 million to interrogate.
I did this guy made a lot of money doesn't mean necessarily that other people I.
What does it but I couldn't make because I didn't have you -- you that our nation and -- -- nation was used wrongly.
It was not his information to -- he did not own that information.
But -- unless there and then they headed in that they're okay -- Carol digital invited Carol.
So but here's the thing -- -- that the market there's always somebody who's gonna have an advantage in the market somebody's gonna have.
A -- computer somebody's gonna have a better out there than somebody always going to have something better than somebody else that's sort of the way the world works by getting that information to market more quickly than the rest of the investors can benefit from it by making money the other investors didn't -- that -- they wanted to advise that guy you're not buying it and door.
But even good so what Carol is saying Carol forgive me for prayer praise but we're Carol say -- that.
There it there is something unfair about the affect the speed of trade that the normal retail trader won't be able ever match right and and the kind of information to.
I'm in -- Caroline Jeremy that are both great points here and I think Carol to your point.
This is about a victimless crime remember the insider Raj Rajaratnam -- said I don't there are no victims here really.
The impact of what I did with dissipated through the markets so I deserve a lighter sentence but would you argue perhaps a Jerry's point.
That the market is the victim here the integrity of the market this really is -- Out of victim as karaoke last word Carol go -- Carol.
I would say it if -- The markets -- victim because it is currently against the law but if you opened it up and allowed people to do that that information gets into the market more quickly and then the market able to synthesize that information and and make it more efficient I think over time.
I'm gonna say that it and absolutely the market aren't a victim look.
-- -- -- Jerry shaking your head and also we could continue this debate her dog but it was -- -- I don't sit out I'm sure you will watch Jerry show eventually Carol rob good to see if thank you very much appreciated.
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