Rage Against The Machine, or, Up With Cheaters!

We here at NotMakingThisUp have no vendetta against Holman Jenkins, Jr., despite this being our second reaction to one of his Wall Street Journal editorials in as many months. In fact, your editor has met him in a social setting, and he seems like a thoroughly reasonable guy.

But his knee-jerk, anything-the-government-does-is-ipso-facto-wrong mindset puts him in the repeated position of defending individuals like MF Global destroyer-in-chief Jon Corzine (here) and Rajat Gupta, former Goldman Sachs board member and convicted Raj Rajaratnam source (here), not to mention, most recently, laying into the government’s prosecution of SAC (here).

It’s a bizarre case of a straight-laced Wall Street Journal writer whose favorite story line seems to be Up With Cheaters!

Since the SAC case is still out there, we have nothing to say about Jenkins’ knee-jerk lambasting of the Feds’ efforts to shut the place down without seemingly having any goods on the boss of the enterprise, although the situation at SAC (five former employees cooperating with the Feds out of eight so far charged criminally on insider trading) recalls what a friend likes to say about these kinds of things: “If it looks like a duck and quacks like a duck…”

Instead, we focus on the biggest whopper in Jenkins’ latest rage against the machine: that the “standard rhetoric” that “the public is cheated” by insider trading “is nonsense.”

Here’s how he puts it:

Under standard rhetoric, the public is somehow cheated by all this, but the standard rhetoric is nonsense. The public isn’t damaged because another party wants to sell or buy….

According to Jenkins’ fuzzy logic, somehow, the investors who sold 175,000 shares of Goldman Sachs to Raj Rajaratnam late in the trading day of September 23, 2008, after Rajaratnam got word from Gupta about Warren Buffett’s $5 billion investment in Goldman—a market-moving event if ever there was one—and thereby left a $900,000 profit on the table that Rajaratnam pocketed for his firm after the stock soared the next day, were not “damaged” or “somehow cheated.”

As Zack de la Rocha would sing, “know your enemy.”

And in our line of business, if not in Jenkins’s, inside traders are the enemy—not the Feds. Good riddance to them.

Jeff Matthews

Author “Warren Buffett’s Successor: Who It Is And Why It Matters”

(eBooks on Investing, 2013) $2.99 Kindle Version at Amazon.com

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