Two Brazilian Brothers to Pay Nearly $5 Million in Heinz Insider Trading Case

[siddharth18]

http://www.sec.gov/News/PressRelease/Detail/PressRelease/1370539873749

 

Two glaring issues regarding the outcome:

 

1. The illicit profits were generated by the fact that the Terpins had information that seller of call option didn't. In the spirit of fairness, don't the "illicit profits" really belong to the seller of the call options? The seller was cheated, ironically, he didn't have insider information and played by the rules. Why shouldn't he get the money that was recouped? Why does the money belong to the government now?

 

2. Why no jail time? What happens to someone who engages in the same behavior and doesn't have the $3 million to settle with SEC? What if they don't have to money to buy the "get out of jail" card?

 

PS: Steven Cohen would be proud.

[matjone]

I actually didn't read the article, but I like the point you bring up about the government keeping the money.

 

It reminds me of car insurance.  Before they had insurance, you'd get hit by another driver and have to settle it in court.  So the solution is to make everyone buy insurance.  But if you are hit by someone and you aren't insured, they fine him and keep the money for themselves, and you are still paying the damages yourself.