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February 27, 2014

What Does Eric Schneiderman Know That the Rest of Us Don't?

“Now that we know New York has an attorney general who makes up the law as he goes along when it comes to the securities industry, where will he draw the line?”

“Today Eric Schneiderman said his office has reached agreements with 18 financial-services firms, most of which are Wall Street banks, to ‘stop their practice of cooperating with analyst surveys administered by certain elite, technologically sophisticated clients at the expense of others.” He said this practice “can put the market at large at an unfair disadvantage.’ And maybe he’s right about that.”

“But who said life is fair? And why is it his business whether banks’ stock analysts answer questions from their firms’ customers? Schneiderman himself said in an interview last month with Bloomberg Television that what the firms were doing ‘does not fit into the classic framework of insider trading.’ So he’s calling it ‘insider trading 2.0.’”

“It used to be hip to call things 2.0 during the 1990s dot-com bubble. Now Schneiderman has appropriated the term as a way of referring to things that are legal that he wants to crack down on because he thinks they’re unfair, even though he doesn’t have a case that would hold up in court.”

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Read full Bloomberg View article here.

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