One has noticed anecdotally that the % of leaked announcements tends to be increasing. Many of the announcements are relayed to the media about 1/2 hour before the release, like the beige book and the employment numbers. The reason is that these media write a story about the number almost simultaneously with the announcement. Many of the stories are 500 to 1000 words and contain interviews with several people talking about the bullishness or bearishness, related to the numbers.

It's sort of like when the government calls up Upside Down, or Sage, or the Greek 4 trillion investment office for guidance on what they're thinking and what should be done. I've always said that the acquisitions get leaked because all that's necessary is a shrug of a shoulders at a squash game between an acquisitions team member and the Chinese wall separated speculator or arbitrageur.

The documented number of cases where sophisticated signaling and front running went on for years emanating from the legal offices of the targets or acquirers shows how rampant it is. One wonders if we've become more jaded, more skeptical, more attuned to this as we see the attitude towards the importance of a level playing field constantly being batter away as we become a society of equality of outcomes rather than a society based on the equality of opportunity,or as Gaynor used to say a society based on the rule of law rather than men.

How could this be quantified? And is the social trend I allude to a necessary consequence of egalitarianism and class warfare rampant today?

Rocky Humbert writes:

DOL among other data providers have allowed reporters early access to the numbers for years (to write their stories). The data & stories were embargoed until the official release time. It used to be that they (literally) had the phones in the press room turned off. That approach doesn't work too well in the age of 3G.

I'm always amused when the Chair bemoans the "unfairness" of it all, simultaneously arguing for the abolishing all sanctions for insider trading. Assuming that there is more leaking (which I have no factual basis to believe or disbelieve), it should make the markets more efficient….

Victor Niederhoffer writes: 

Rocky has a good point. But ever since I wrote my article Insider Trading with Lorie in Jrl of Law and Economics, 50 years ago [Ed.: actually 44 years ago], I have never agreed with professor Manne that insider trading is harmless. It takes money away from one group and gives to another. It's a dead weight cost. As for the reporting thing, I think that the leaks are a lot more prevalent now and perhaps it's because of better ability to send info over the channels before the release. The reporters shouldn't get the stories in advance in my view because they're leaking them much better. That's my hypothesis. It's nice to have rocky back to disagree with me on all my hypotheses.





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