Everybody knows the war is over
Everybody knows the good guys lost
Everybody knows the fight was fixed
The poor stay poor, the rich get rich
That’s how it goes
Everybody knows (...)
This current has been running through our society for decades now. Remember when the Snowden leaks hit and a yawning chorus of nihilists told us that they knew already and so should anyone else with the smallest iota of sophistication? Back then Jay Rosen coined a rejoinder to this counsel of despair: "Don't savvy me" (...)
Everybody knows. It's what we heard after the Panama Papers. Swissleaks. Luxleaks. The Paradise Papers. Everybody knows! It's what the nothing-to-see-here crowd said about Propublica's explosive IRSLeaks, back in 2021:
https://pluralistic.net/2021/06/15/guillotines-and-taxes/#carried-interest
The leaks revealed the tax-dodges of the richest and most powerful people in America, which were jaw-dropping in their audacity and shamelessness. Sure, maybe you suspected that the 400 richest people in America paid less tax than you – but did you really guess that the means by which they did this was through taking massive deductions on their elite hobbies? (...)
Propublica isn't done with the IRS Files. Today, they published a long investigation into ultra-rich corporate executives who buy and sell their competitors' stock for massive profits with suspiciously precise timing. The data comes from 1099-B filings, which brokerages file with the IRS with each trade, but which the IRS doesn't share with the SEC:
https://www.propublica.org/article/secret-irs-files-trading-competitors-stock
Here are some examples:
Ohio billionaire August Troendle, CEO of Medpace, repeatedly bought and sold shares of $Syneos – his company's archrival, timing the transactions with a management shakeup that dropped the stock by 16% in one day, and an SEC investigation that crushed Syneos's stock by 25%. His precision timing made him at least $2.3m in profit.
Isaac Larian, CEO of Bratz-maker MGA, made $28m trading shares in Mattel, MGA's nemesis and frequent litigant – during a period when Mattel stock crashed by 57% (!). Larian boasts that "I made a LOT more money shorting Mattel stock than they did running a $4.5 billion toy company."
Larian's trades also involved some very precise timing. Sometimes, he took positions just before his own company announced its upcoming products, and others positions immediately preceded major disclosures from Mattel. Larian's subordinates told Propublica that he is "is a boss with an endless appetite for information about his company and its competitors, constantly grilling subordinates on minutiae about the industry."
Larian couldn't explain the timing of these trades. His lawyer told Propublica that it was "false and defamatory" to suggest that he "possessed material, nonpublic information that Larian knew was obtained in breach of a duty."
Next up is Gerald Boelte, founder and chair of the massive oil company LLOG. LLOG partners with other companies for its oil drilling. Companies like Stone Energy. Boelte bought a huge position in Stone the day before the company's 2015 earnings report, in which they revealed an increase their reserves' value, pulling in a 65% one day profit. He'd never bought shares in Stone before.
Boetle told Propublica, "I do not and have never traded on any material, non-public information of competitors, business partners or others… Any implication that I was investing based upon advance knowledge is therefore clearly false."
Jim Sankey is CEO of Invue. He bought $3.2m worth of shares in his rival Checkpoint, while checkpoint was in secret negotiations to be acquired by CCL Industries. Sankey was already thoroughly connected to Checkpoint, having sold a $150m product line to them in 2007. There's no record that he'd ever traded Checkpoint before. He made $2.3m. Sankey says "he did not know Checkpoint was going to be acquired." He says that his company was not approached by Checkpoint as a potential acquirer.
Barry Wish was a board member of Ocwen, a company he co-founded. After the Great Financial Crisis, Ocwen bid unsuccessfully to buy $215b worth of Bank of America mortgages. The winning bidder was Nationstar. Three weeks before Nationstar's winning bid was announced, Wish bought $600k worth of Nationstar shares. After the bid was announced, he sold them for for a $157k profit.
Wish told Propublica that he never traded competitors' stock: "No, not at all." Propublica read him the details of the trade from his leaked 1099-B. He said "You might see it, but I don’t have any recollection" and hung up.
Steven Grossman is a cardboard heir – a nepobaby who inherited Southern Container Corp from his grandpa. After he sold the company to Rock-Tenn for $1b in 2013, he stayed on as a senior exec. Over the next 5 years, he traded large blocks of shares in Rock-Tenn's competitors, companies like Temple-Inland, a company that he made a 37% profit on after its acquisition was announced in 2011, one week after Grossman started buying its shares.
Grossman falsely told Propublica, "I haven’t traded stock since then." IRS records show that Grossman continued to trade. Grossman also told Propublica that he had no role with Rock-Tenn, despite being on their payroll for five years. When asked about his extremely lucky timing buying and selling Temple-Inland, he said "That was 10 years ago" and hung up.
As Propublica's Robert Faturechi and Ellis Simani write, Securities regulations have their origins in the crash of 1929, and the subsequent collapse in confidence in markets and capitalism, the sense that the system was rigged for the wealthy and political insiders. That is a pretty good summation of sentiment today:
https://pluralistic.net/2023/03/15/mon-dieu-les-guillotines/#ceci-nes-pas-une-bailout
It's not just that corporate executives are corrupt, it's that they're lavishly, shamelessly, endlessly, incorrigibly corrupt.
by Cory Doctorow, Pluralistic | Read more:
Image: uncredited
