[HN Gopher] Regulators of Facebook, Google and Amazon also inves...
___________________________________________________________________
Regulators of Facebook, Google and Amazon also invest in the
companies' stocks
Author : marban
Score : 204 points
Date : 2022-10-13 16:10 UTC (6 hours ago)
(HTM) web link (www.wsj.com)
(TXT) w3m dump (www.wsj.com)
| neonate wrote:
| https://archive.ph/tv7Xm
| 1vuio0pswjnm7 wrote:
| https://www.wsj.com/articles/how-wsj-analyzed-12-000-federal...
|
| WSJ should publish this database, i.e., the data and disclose the
| software used. This is not a database of leaked information. It
| is all publicly available.
|
| Instead, WSJ tells readers all about how they constructed it,
| like some sort of teaser. This reminds me of computer science
| papers that describe software the authors wrote but refuse to
| release. How can the reader be certain the software did not
| contain errors that affected the results.
|
| There are some who believe researchers who publish findings about
| some object of study for the benefit of the public, e.g., an
| academic community or a newspaper readership, are "obligated" to
| supply the resources they used to other researchers so others can
| replicate or conduct further studies.
| Mountain_Skies wrote:
| When I worked at a law firm, all of my market trades of
| individual stocks had to go through clearance, regardless of
| size, even though I never had access to privileged information.
| Never had a trade anywhere near $15,000 in value but everything
| still had to go through clearance first. I was never denied a
| trade but one of my co-workers had a couple of his trades delayed
| a few weeks.
| theptip wrote:
| I can just about see a case for letting FTC officials hold
| industry-specific funds long, along the same lines as giving
| employees stock grants; in some sense you might want the
| regulators to want the broader industry to be successful. Even
| this is questionable though; are we currently erring in having
| regulators be too business-hostile? Unclear.
|
| But allowing regulators to trade individual stocks that they
| regulate is unacceptable, at any dollar value. There is just no
| way to avoid conflicts of interest. If this rule means you can't
| hire good people, the salary needs to increase.
| MichaelCollins wrote:
| So do legislators. Is it any wonder the American government
| seemingly lets these companies get away with anything?
|
| What did Bill Gates learn after the Microsoft antitrust case?
| Don't snub Washington:
|
| https://www.cnbc.com/2020/10/14/bill-gates-i-was-naive-at-mi...
|
| > _" I was naive at Microsoft and didn't realize that our success
| would lead to government attention," Gates said, referring to
| Microsoft's antitrust challenges from more than 20 years ago.
| "And so I made some mistakes -- you know, just saying, 'Hey, I
| never go to Washington, D.C.' And now I don't think, you know,
| that naivete is there."_
|
| https://money.cnn.com/magazines/fortune/fortune_archive/2002...
|
| > _For a couple of embarrassing years in the mid- '90s,
| Microsoft's primary lobbying presence in D.C. was "Jack and his
| Jeep." As the software giant's sole in-house lobbyist, Jack
| Krumholtz, then 33, had to battle endless traffic jams to get
| from Microsoft's suburban sales office to Capitol Hill. "Early on
| I spent most of the day in my Jeep Grand Cherokee on my
| cellphone," Krumholtz says. "I hit an all-time low on the day I
| was parked on a Capitol Hill side street reading through my mail
| with the laptop on the steering wheel."_
|
| > _No longer. After the Justice Department filed its antitrust
| suit in 1998, Microsoft--a company famous for its disdain of
| government--undertook the largest government affairs makeover in
| corporate history. The company now boasts one of the most
| dominating, multifaceted, and sophisticated influence machines
| around, one that spends tens of millions a year. It 's no great
| surprise that one of the country's wealthiest companies can
| bankroll a beefed-up lobbying operation when it faces a crisis.
| But what few people realize is that Microsoft has reached the
| very highest ranks of lobbying so quickly. Says David Hart, a
| lobbying expert at Harvard's Kennedy School of Government:
| "Microsoft has joined the top tier"--with such longtime
| heavyweights as Philip Morris, Lockheed Martin, and AT&T._
| systemvoltage wrote:
| > So do legislators.
|
| Yea but there is a decent amount of awareness around it.
| Regulators, not so much.
| metadat wrote:
| Not really, I was clueless to the scale of the securities
| abuse our congressman engage in until seeing the
| UnusualWhales twitter account.
|
| It's a club.. and we're not in it.
| systemvoltage wrote:
| I thought there was a bill that's on the table. Yea,
| UnusualWhales is an awesome account, just wild what kind of
| parties happen in the club we're not in.
| ridgered4 wrote:
| I've noticed most people seem to be under the impression that
| Microsoft suffered some big loss from the antitrust case, and
| use it as evidence that Apple or Google will soon be taken down
| a peg too. Looking back they just built the lobbying arm they
| were missing and then the problem pretty much went away. Sure,
| there were some browser choice pre-load things in Europe and
| Korea but those things never came to the US and came well after
| the benefit had already been achieved in the browser war.
| malshe wrote:
| Free link:
|
| https://www.wsj.com/articles/the-regulators-of-facebook-goog...
| PragmaticPulp wrote:
| > An investment of $15,000 or less in an individual stock, or of
| $50,000 or less in an industry-specific mutual fund, isn't deemed
| a conflict of interest under federal regulations.
|
| > An FTC spokesman said the agency officials had followed the
| law.
|
| While I don't really want to see regulators owning any amount of
| individual stocks in companies they're directly regulating, the
| $15,000 individual stock limit limits the impact quite a bit.
| Even if someone did own $15,000 of an individual stock, the
| personal financial gain/loss of even major regulatory actions
| isn't a huge amount.
|
| Also keep in mind that you can't buy basically any large cap
| mutual fund without owning significant amounts of Facebook,
| Google, Amazon, Apple, and other large companies.
| lostmsu wrote:
| What about derivatives?
| compsciphd wrote:
| at Bloomberg, even thought I didn't work on any financial
| product (I worked on their law product), I wasn't allowed to
| own any derivatives per my contract.
| quadcore wrote:
| _Even if someone did own $15,000 of an individual stock, the
| personal financial gain /loss of even major regulatory actions
| isn't a huge amount_
|
| In whose mind? Most people would fight to defend 50$ like they
| are defending their life, especially rich ones from my
| experience. Add to that the spouse asking questions and that
| 15k is worth a million.
| peyton wrote:
| Isn't the correct comparison other ethics rules around
| conflicts of interest/gifting/etc for government officials?
| Upside on $15k through each merger transaction seems way out of
| line.
| dnissley wrote:
| What large bumps due to merges/acqs are you referring to?
| MichaelCollins wrote:
| Even a hundred dollars is enough to make people feel an
| irrational protective attachment to the company. Shit, even
| _buying_ a company 's product has been known to make people
| treat that company like part of their tribe. Insult Apple in
| another thread if you want to see a demonstration of this. Or
| insult the Harley Davidson company at a biker bar.
| dsfyu404ed wrote:
| >Or insult the Harley Davidson company at a biker bar.
|
| Mentioning Toyota's EV situation on HN is a little more
| relatable for this crowd.
| PragmaticPulp wrote:
| > Even a hundred dollars is enough to make people feel an
| irrational protective attachment to the company.
|
| But anyone with stock investments at this scale is already
| seeing their portfolio swing a couple hundred dollars on the
| regular. Regulators also have far more to lose in their
| career (paying potentially millions over the multi-year
| course of their tenure) by making the wrong decision than
| they would by swinging their portfolio a couple hundred bucks
| on a given day.
|
| We can't realistically demand that all public regulators
| abstain from investing in, for example, an S&P 500 index fund
| that holds several percent of Apple stock. If the job came
| with a requirement that the job holder couldn't invest
| standard index funds, anyone who knows anything about
| investing and financial planning would avoid the job at all
| costs.
|
| There has to be a compromise. You can't demand absolute zero
| financial interest in things like index funds over the mere
| chance that someone might make an irrational career-harming
| move to swing their portfolio a couple hundred bucks.
| JamesianP wrote:
| Making rules that avoid triggering irrational behavior is
| rather hopeless by definition though. For all we know a
| regulator once dated someone who worked at a company and the
| bad breakup makes them spiteful against the whole
| organization.
|
| The solution there has to be oversight to identify when a
| regulator is misbehaving.
|
| Though I'm fine with limiting their ownership to zero for
| purely rational reasons. A few thousand bucks worth of
| loss/gain might still sway small borderline decisions.
| MichaelCollins wrote:
| I don't seriously propose that regulators looking at Apple
| should be forbidden from owning Apple devices; that's too
| impractical even though it would otherwise be a good idea.
| For practical reasons I'd give a pass to indirect
| investment through mutual funds/etc too. But forbidden them
| from buying any amount of AAPL directly? I think that's
| very reasonable.
| JamesianP wrote:
| yes I was referring to stock ownership too, and only
| rational behavior. A phone probably won't change
| measurably in value from a regulatory decision, but $15k
| of stock certainly could.
| JumpCrisscross wrote:
| > _forbidden them from buying any amount of AAPL
| directly?_
|
| Once the investigation starts, absolutely. But forcing a
| regulator to sell their $10k stake in Apple prior to
| investigating them creates its own weird incentives.
| yibberish wrote:
| we certianly need some way to separate the role of the
| regulator, from the person doing that job.
| pb7 wrote:
| You don't even have to _buy_ anything. Insult Linux in a
| forum full of tech nerds if you want to see a demonstration
| of this.
| kornhole wrote:
| Linux users love to insult Linux. That is what drives its
| improvements.
| TulliusCicero wrote:
| Germans love to complain about Germany, but if someone
| _else_ does it...
|
| This is pretty typical behavior, actually. I grew up
| Mormon, Mormons complain about people making polygamy
| jokes about them but also make polygamy jokes themselves.
| It's an in-group vs out-group thing: _we_ can make those
| jokes.
| spywaregorilla wrote:
| Buying things that you're going to display as part of your
| personal image sounds like a much more relationship intensive
| activity than buying stock imo
| varelse wrote:
| modriano wrote:
| Is that limit on the cost basis of the position or would the
| conflicted regulator have to sell off some stock if their
| position exceeded the $15k threshold?
| kyleblarson wrote:
| Do they specify that that 15k is in the underlying equity
| itself? If not, it is incredibly easy to use options to
| leverage the hell out of that $14,999.
| [deleted]
| cma wrote:
| If they held $15,000 in Facebook, Google, Amazon, Apple, MS,
| Nvidia, AMD, Intel, Qualcomm, TSMC, that's $150,000, and often
| these companies are doing extensive intermixed deals with each
| other with exclusivity agreements and other similar stuff.
| calibas wrote:
| What if the stock is owned by a spouse?
| WheatMillington wrote:
| Sometimes I feel like I live on a different planet to the
| people on HN. I don't own $15k of ANY single stock. In fact I
| don't have significant savings outside of retirement savings
| (which I deliberately don't manage) of that magnitude. If I had
| $15k of any given stock, I'd have an extreme personal interest
| in the performance of that stock
|
| IDK, maybe it's that I don't work in tech and I'm too young or
| too old or whatever (37, 2 kids) but it just seems crazy to me
| to think that for some people $15k in any SINGLE stock isn't a
| meaningful amount of money.
| grog454 wrote:
| The point is: would you be willing to risk massive fines and
| jail time for making unethical decisions to try to turn your
| $15k into $30k if you did? Probably not.
|
| But if you could move your entire life savings into a stock
| the incentive for shady stuff increases significantly.
| WheatMillington wrote:
| What are you talking about? There is no risk, the point is
| they're perfectly allowed to hold $15k in these stocks.
| JumpCrisscross wrote:
| > _the point is they 're perfectly allowed to hold $15k
| in these stocks_
|
| They're not allowed to insider trade on it, or corruptly
| modify their regulatory duties on account of it,
| irrespective of whether is $1 or ten thousand.
| ip26 wrote:
| The risk is doing something illegal or unethical to
| increase the value of their holdings. The larger their
| holdings, the larger the incentive to do that illegal or
| unethical thing.
| DannyBee wrote:
| Thankfully, all federal government positions like this have
| clearly specified salary ranges.
|
| So let's take the DOJ, since they have easy to find
| vacancies.
|
| https://www.justice.gov/legal-
| careers/vacancies?position=1&t...
|
| They are mostly GS-15, which is 150-175k pay per year. They
| do fine on benefits, etc.
|
| 15k in stock is not a ton for them.
|
| Certainly not something you'd mess up a job or career over.
| chiefalchemist wrote:
| The amount of money, relatively, is negligible. On the other
| hand, in the human psyche it can create significant bias.
|
| Specially, for example, humans have an aversion to loss. It's
| true for small amounts. Certainly, for larger amounts it's
| just as bad. That is, few people regardless of resources
| would reach into their pocket and toss $15K into a fire pit.
| We're simply not wired for that.
|
| And that wiring is going to influence the decision made. The
| amount is a minor factor.
| Gh0stRAT wrote:
| There are people on HN working for the big tech companies who
| are being granted that $15k worth of stock every month.
| ($180k/year) At the more senior levels and/or with some stock
| appreciation, it's not unheard-of for >50% of compensation to
| be in the form of RSUs.
|
| Obviously they should sell-on-vest and diversify into index
| funds, but a lot of them choose to buy and hold some
| individual stocks that they're bullish on as well.
| ip26 wrote:
| You've certainly got a point, but if a regulator has the
| ability to indirectly swing the valuation 10%, they stand to
| gain at most $1.5k which should be in the realm of a week's
| pay. It's an interest to be sure, but it would be hard to use
| it to finance a Lamborghini habit.
| bo1024 wrote:
| Regulators have the ability to swing the entire market.
| is_true wrote:
| Some people don't care about the money they have and it's not
| always because they have well above avg.
| pb7 wrote:
| If you have $211K or more in your 401(k) invested in S&P 500
| or similar, you technically have $15K invested in a single
| stock: $AAPL.
| Rebelgecko wrote:
| If you're invested in the S&P500 wouldn't you fall under
| the separate limits for mutual funds?
| [deleted]
| bern4444 wrote:
| To further this, if you have 200k of VTI/VTSAX or of a non
| vanguard alternative, that's $15,000 of Apple stock alone. It's
| about 6% of VTI currently which will hold true of any broad
| based market fund.
|
| If you own a tech sector fund like VGT, Apple makes up 22% of
| the fund. So having 200k of VGT is going to be just shy of
| $50,000 worth of apple stock.
| francisofascii wrote:
| > Nearly one in four top FTC officials owned or traded
| individual stocks of tech companies
|
| While I agree a broad based fund will have allocations of these
| stocks and should be okay for them to own, but what are they
| doing owning individual stocks?
| seanmcdirmid wrote:
| Micro managing their portfolios? I can also imagine a lot of
| them getting in on IPOs or later offerings before becoming
| FTC officials and not clearing those stocks out of their
| portfolio. But $15k...isn't a lot.
| alistairSH wrote:
| $15k is ~1 months salary for a senior bureaucrat (GS scale)
| in DC metro. How many months income does it take to corrupt
| somebody? $15k into each FAANG is $75k, double the national
| median income. It all adds up a sizable potential conflict.
|
| This is roughly the same debate as Congress, just on a
| smaller scale. What is the balance between reasonable
| individual financial management and ensuring conflicts
| don't exist?
| seanmcdirmid wrote:
| > $15k is ~1 months salary for a senior bureaucrat (GS
| scale) in DC metro.
|
| That isn't income, profit, or gains, but just the actual
| amount of stock they can hold/trade at some time. Let's
| say they had inside information, $15k doesn't allow for
| much leverage to take advantage of that information.
|
| > How many months income does it take to corrupt
| somebody?
|
| Probably a heck of a lot more than you could earn on
| trading just $15k of stock.
| alistairSH wrote:
| Yeah, I suppose the real question is how active is their
| trading? And are systems in place to catch them if they
| do appear to trade on insider info?
|
| This is one of those situations where the
| possibility/impression of special access to gains is
| probably worse than any actual gains being made. And it's
| certainly a much smaller scale than what we saw with
| Congress ($10s of millions in some cases).
| JumpCrisscross wrote:
| > _what are they doing owning individual stocks?_
|
| Many advisors invest based on an index (or modified index)
| but hold shares in clients' accounts directly.
| levesque wrote:
| Isn't everyone investing in FAANG etc. at this point? Like if you
| have a retirement fund you own these stocks almost guaranteed.
| Probably beyond the 50K industry specific limits mentioned
| elsewhere in here too
| bin_bash wrote:
| If that's all it was this wouldn't be a story. This is
| specifically talking about _individual_ stocks.
|
| > Nearly one in four top FTC officials owned or traded
| individual stocks of tech companies such as Amazon.com Inc.,
| Meta Platforms Inc.'s Facebook, Alphabet Inc.'s Google,
| Microsoft Corp. and Oracle Corp.
| [deleted]
| madeofpalk wrote:
| The Verge prevents its employees from owning or trading
| individual tech stocks, but permits general (retirement) funds
| https://www.theverge.com/ethics-statement
| mikece wrote:
| Wouldn't this be a pretty cut-and-dry case of insider trading (or
| do regulators have an exemption to insider trading rules like
| members of congress have?)?
| volfied wrote:
| People that can officially call it insider trading are the ones
| doing it.
| mikece wrote:
| There have been bills introduced to ban members of Congress
| from insider trading but, amazingly, they keep getting shot
| down in committee.
| JumpCrisscross wrote:
| > _have been bills introduced to ban members of Congress
| from insider trading but, amazingly, they keep getting shot
| down in committee_
|
| This is incorrect. The STOCK Act banned insider trading by
| members of Congress in 2012 [1]. Disclosure requirements
| for staffers were amended in 2013 [2], but prohibitions on
| Congressmen remain in force [3].
|
| [1] https://en.wikipedia.org/wiki/STOCK_Act
|
| [2] https://en.wikipedia.org/wiki/STOCK_Act#Amendment
|
| [3] https://en.wikipedia.org/wiki/2020_congressional_inside
| r_tra...
| lcampbell wrote:
| > _but prohibitions on Congressmen remain in force_ [i.e.
| 2020 congressional insider trading]
|
| Is it really "in force" when, despite much ado, no
| charges were brought in the linked scandal [1][2]? I
| don't really have a horse in this race, I just took issue
| with the particular example you referenced.
|
| [1]
| https://www.nytimes.com/2020/05/26/us/politics/senators-
| stoc...
|
| [2] https://www.cnbc.com/2021/01/19/doj-will-not-charge-
| sen-rich...
| JumpCrisscross wrote:
| > _when, despite much ado, no charges were brought in the
| linked scandal_
|
| A Senator's phone was subpoenaed by the FBI. That's
| substantial. (The allegation was Burr had insider
| information on broad market movements. Absent direct
| evidence he misappropriated privileged information,
| that's a tough charge to bring. Had he bought _e.g._
| Moderna shares, prosecutors may have had a case.)
|
| The whole thing, moreover, came to light because of the
| STOCK Act. There are now calls for bans on individual
| stock trading by Congressmen as a result of the evidence
| from these scandals.
|
| I'm not defending the _status quo_. But it's definitely
| improving and not a free for all.
| BurningFrog wrote:
| It's maybe how cops are exempt from speeding tickets etc.
| schainks wrote:
| My tax dollars should pay for these companies to be regulated in
| the interests of the people, not the interests of the people that
| are regulators.
|
| The fewer opportunities for conflict of interest, the better the
| outcomes in the general case.
| lacoolj wrote:
| so? if they aren't regulating properly they have oversight to
| remove them. what they invest in with their own money is their
| business.
| DesiLurker wrote:
| You can possibly be serious about that remark. This is the
| definition of conflict of interest. they are much less likely
| to make decisions that would make their own investments go
| down. this is why regulator are supposed to put their money in
| a blind trust.
|
| Also, what makes you think their oversight would not be
| invested like them and not have the same conflict of interest
| as them?
___________________________________________________________________
(page generated 2022-10-13 23:01 UTC)