Day: October 23, 2019

Insider trading by investment bankers: a conundrum given poor risk/reward

In the financial news today was an article about three investment bankers getting charged for running an insider trading scheme. The bankers worked at Goldman, Moelis and Centerview, and the scheme ran from 2012 to 2018 targeting M&A deals mainly in the pharma space. Along the years there’s been many other similar cases, ranging from a Lazard managing director who passed on tips to fund his affair with a mistress, to SAC Capital’s gigantic insider trading operation.

In a general sense I can understand the urge to engage in insider trading. It’s simple. Greed is a basic instinct. But it’s difficult to understand why certain people can’t suppress that urge given that the risk/reward seems unfavorable. I use the word “seems” here because there is a chance that my assumptions are wrong; perhaps only a fraction of people get caught and that the smartest ones end up making a crazy amount of money consequence free.

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SoftBank’s bailout of WeWork: founder wins, most others lose

I’m writing this post on a transcontinental flight to London. My habit prior to boarding these flights is to download a bunch of content ranging from Amazon Prime movies to various periodicals including the Financial Times and The New York Times. I also carry a book with me — a real one, not a Kindle version. I try to avoid doing work unless it’s urgent as I find my productivity to be too low relative to working out of my office, and try to stay off the in-flight Wifi which is irritatingly slow anyway.

Scanning through the FT app on my iPad, I’ve noticed that the WeWork saga has taken another turn for the worse. WeWork’s board has agreed to a $6.5 billion bailout package from SoftBank, coming in the form of equity and loans. I predicted in an earlier post that WeWork will end up pursuing a deal with SoftBank rather than with JPMorgan, and that is exactly how it’s playing out.

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