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The Story Of Joseph Nacchio And The NSA

businessinsider.com

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Re: The Story Of Joseph Nacchio And The NSA

#21

Post by etherael »

tptacek wrote: post #19
etherael wrote: post #12

Earlier quoted context omitted.

> Joseph Nacchio sold millions of dollars of Qwest stock after gaining access to information about weak future sales "Gaining access to information about weak future sales" = He was threatened directly by the NSA that they would cut existing and not provide future contracts to the tune of approximately 3bn worth of revenue if he didn't play ball. How is he supposed to notify the public of this fact when there's an im…

Yes, he's expected to "take the financial hit." It is illegal for insiders to trade on secret information. You're not thinking it through carefully: Nacchio defrauded whomever bought his shares at their inflated price.

I'm completely aware the legally subservient option is to "take the financial hit". You're not think it through carefully, I just don't see that as a particularly relevant or salient point, the law is just an arbitrary set of rules the biggest bully has put in place, they probably congratulated themselves on a clever ploy putting him between a rock and a hard place rather than considering whether what they were doing and if the law was sane and gag orders attached to business negotiations with millions of dollars worth of personal repercussions for people under intense pressure to submit to the state was acceptable

Re: The Story Of Joseph Nacchio And The NSA

#22

Post by tptacek »

etherael wrote: post #21
tptacek wrote: post #19

Earlier quoted context omitted.

Yes, he's expected to "take the financial hit." It is illegal for insiders to trade on secret information. You're not thinking it through carefully: Nacchio defrauded whomever bought his shares at their inflated price.

I'm completely aware the legally subservient option is to "take the financial hit". You're not think it through carefully, I just don't see that as a particularly relevant or salient point, the law is just an arbitrary set of rules the biggest bully has put in place, they probably congratulated themselves on a clever ploy putting him between a rock and a hard place rather than considering whether what they were doing…

I am not smart enough to understand how anything NSA did could have justified Nacchio defrauding his shareholders by willfully and knowingly selling them stock in his company at an inflated price.

Neither, it seems, was the court.

Re: The Story Of Joseph Nacchio And The NSA

#23

Post by squozzer »

It's probable Nacchio was trading stock illegally. It's also not surprising the feds would use whatever leverage they could to obtain compliance. Cops recruit snitches all the time using similar tactics.

The difference is that snitches exist to inform police of criminal activity, not to spy (or enable spying) on their customers.

Re: The Story Of Joseph Nacchio And The NSA

#24

Post by etherael »

tptacek wrote: post #22
etherael wrote: post #21

Earlier quoted context omitted.

I'm completely aware the legally subservient option is to "take the financial hit". You're not think it through carefully, I just don't see that as a particularly relevant or salient point, the law is just an arbitrary set of rules the biggest bully has put in place, they probably congratulated themselves on a clever ploy putting him between a rock and a hard place rather than considering whether what they were doing…

I am not smart enough to understand how anything NSA did could have justified Nacchio defrauding his shareholders by willfully and knowingly selling them stock in his company at an inflated price. Neither, it seems, was the court.

In my humble opinion, the least morally questionable action to take in this scenario would have been to ignore the gag order, explain in public why the business was being lost, and take the rational sale option because of it.

Even this option isn't that great from his perspective though, I don't know what the penalty on breaking those gag orders is, I guess it's more than the penalty for insider trading?

They put him in a situation with a stack of bad options and even the best ones weren't that great, sitting back and criticising his actions after the fact whilst laying none of the blame on the people and institutions that created the situation is something I'm not smart enough to understand why you think is an acceptable analysis to take?

Re: The Story Of Joseph Nacchio And The NSA

#25

Post by jessaustin »

tptacek wrote: post #20
jessaustin wrote: post #17

Earlier quoted context omitted.

He also thought that he was safe doing what the vast majority of CEOs do on a regular basis. At the time of the stock sales he didn't realize just how much he was going to piss off the NSA in the next couple of years, much less how obedient federal prosecutors are to the NSA. It is impossible to become CEO of an ILEC without collecting a vast array of assets vulnerable to official attack. Nacchio might well have deci…

I'm not sure why I'm expected to give a shit that lots of other CEOs are defrauding the public alongside people like Nacchio.

Hahaha, too true. "Insider trading" is totally a made-up crime, intended more for the selective-enforcement convenience of our superiors in the Justice Department than for "the public". If the public wasn't so damn greedy, they'd invest in T-bills like good subjects. Leave the "high-yield" investing for those who are in the loop. That way NSA staff and their friends in Congress and on K Street can get all the money there is to be made by trading on their contract decisions.

Re: The Story Of Joseph Nacchio And The NSA

#26

Post by tptacek »

etherael wrote: post #24
tptacek wrote: post #22

Earlier quoted context omitted.

I am not smart enough to understand how anything NSA did could have justified Nacchio defrauding his shareholders by willfully and knowingly selling them stock in his company at an inflated price. Neither, it seems, was the court.

In my humble opinion, the least morally questionable action to take in this scenario would have been to ignore the gag order, explain in public why the business was being lost, and take the rational sale option because of it. Even this option isn't that great from his perspective though, I don't know what the penalty on breaking those gag orders is, I guess it's more than the penalty for insider trading? They put him…

He committed a fraud. Not against the government. Against his own shareholders. He sold equity in Qwest at prices he knew were not reflective of the underlying value of the stock, based on actual actionable secret information available to him as a company insider. That's a crime, as it should be.

NSA shouldn't pressure people to comply with gag orders, but that doesn't excuse Nacchio from choosing to harm his own shareholders simply to make additional tens of millions of dollars over what he already had. You can come up with 1,000 different ways to rephrase what you said; it will never convince me that multimultimultimillionaires should be excused for defrauding their own shareholders to increase their own bank balances.

Re: The Story Of Joseph Nacchio And The NSA

#27

Post by tptacek »

jessaustin wrote: post #25
tptacek wrote: post #20

Earlier quoted context omitted.

I'm not sure why I'm expected to give a shit that lots of other CEOs are defrauding the public alongside people like Nacchio.

Hahaha, too true. "Insider trading" is totally a made-up crime, intended more for the selective-enforcement convenience of our superiors in the Justice Department than for "the public". If the public wasn't so damn greedy, they'd invest in T-bills like good subjects. Leave the "high-yield" investing for those who are in the loop. That way NSA staff and their friends in Congress and on K Street can get all the money t…

If you want to argue that the USG should be more aggressively enforcing insider trading laws so as not to make extremely egregious violations look like selective enforcement, I'm right there with you. Otherwise, spare me the sob story that's attempting to rehabilitate the image of outrageously wealthy people who have committed fraud.

Re: The Story Of Joseph Nacchio And The NSA

#28

Post by etherael »

tptacek wrote: post #26
etherael wrote: post #24

Earlier quoted context omitted.

In my humble opinion, the least morally questionable action to take in this scenario would have been to ignore the gag order, explain in public why the business was being lost, and take the rational sale option because of it. Even this option isn't that great from his perspective though, I don't know what the penalty on breaking those gag orders is, I guess it's more than the penalty for insider trading? They put him…

He committed a fraud. Not against the government. Against his own shareholders. He sold equity in Qwest at prices he knew were not reflective of the underlying value of the stock, based on actual actionable secret information available to him as a company insider. That's a crime, as it should be. NSA shouldn't pressure people to comply with gag orders, but that doesn't excuse Nacchio from choosing to harm his own sha…

> NSA shouldn't pressure people to comply with gag orders, but that doesn't excuse Nacchio

I agree with you, I just think what the state did was worse. Not only that but that kind of behaviour is par for the course for them rather than an exception to the rule that they resorted to in order to deal with a situation not of their own creation.

You are right though, he was no angel.

Re: The Story Of Joseph Nacchio And The NSA

#29

Post by tptacek »

etherael wrote: post #28
tptacek wrote: post #26

Earlier quoted context omitted.

He committed a fraud. Not against the government. Against his own shareholders. He sold equity in Qwest at prices he knew were not reflective of the underlying value of the stock, based on actual actionable secret information available to him as a company insider. That's a crime, as it should be. NSA shouldn't pressure people to comply with gag orders, but that doesn't excuse Nacchio from choosing to harm his own sha…

> NSA shouldn't pressure people to comply with gag orders, but that doesn't excuse Nacchio I agree with you, I just think what the state did was worse. Not only that but that kind of behaviour is par for the course for them rather than an exception to the rule that they resorted to in order to deal with a situation not of their own creation. You are right though, he was no angel.

If you want to use Nacchio as an example of the unscrupulous tactics of NSA, I have no objection, as long as you don't try to rehabilitate Nacchio in the process.

Re: The Story Of Joseph Nacchio And The NSA

#30

Post by jessaustin »

tptacek wrote: post #27
jessaustin wrote: post #25

Earlier quoted context omitted.

Hahaha, too true. "Insider trading" is totally a made-up crime, intended more for the selective-enforcement convenience of our superiors in the Justice Department than for "the public". If the public wasn't so damn greedy, they'd invest in T-bills like good subjects. Leave the "high-yield" investing for those who are in the loop. That way NSA staff and their friends in Congress and on K Street can get all the money t…

If you want to argue that the USG should be more aggressively enforcing insider trading laws so as not to make extremely egregious violations look like selective enforcement, I'm right there with you. Otherwise, spare me the sob story that's attempting to rehabilitate the image of outrageously wealthy people who have committed fraud.

I won't speak for anyone else who takes an interest in Nacchio, but I don't care a bit for him personally. (Well, I guess if he and Ed Whitacre were both on fire, I'd piss on Nacchio first, but that's it.) His significance is more related to what it tells us about how the various parts of our government collaborate, take decisions, and act when no one is looking, and how the three-felonies-a-day phenomenon enables that.

To enforce insider trading laws in a "fair" way would require a massive expansion of the SEC and related agencies, which expansion would be funded by the general fisc for the specific benefit of investors. There are arguments to be made for that, but they seem similar to the arguments one hears for more aggressive enforcement of our drug prohibition. Those who argue loudest are interested parties. I'd prefer we reverse our many-decades trend, and experiment with less enforcement rather than more. I doubt we're capable of that, but sometimes I indulge in optimism.

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