[jswny]

I'd be interested in hearing more about how these firms get away with this kind of thing. I interned at an investment firm last year and the lawyer who worked in their compliance department told me how detailed, thorough, and stringent the audit that was done by the SEC the year before I got there was. Keep in mind, this was a small firm. Do larger firms have some way of keeping those kinds of things secret? Sorry if I'm misinterpreting something here, I have almost no financial knowledge as I worked in the tech department as a programmer.

[camelNotation]

I work in an area of finance technology connected to this process. It's no different than escalation in any other form of criminality. Cops wear armor, criminals buy armor-piercing rounds. Auditors looks deeper, so the pertinent information is masked deeper.

At this point, the major gap in our financial regulatory process is at the detection layer, not the investigations layer. If you can keep specific scenarios under wraps, you can avoid things quite easily, especially if the scenarios you do cover are impressively complex and thorough. So you hire PhDs in math and physics to identify and create your algorithms. They do a great job identifying scenarios where known criminal activity occurs, but they aren't informed on the specific, complicated, and should-be-totally-illegal actions your firm is engaged in, so they are basically shooting in the dark with no chance of finding the real misdeeds. These algorithms are genius-level complex, greatly reducing the number of government employees that will be able to decipher them. You create hundreds or thousands of them, making it prohibitively difficult for anyone in a regulatory agency to take the time to understand them all, then you assure the regulators you have all your bases covered. You show them the evidence of all the wrongdoing you've identified (also an insurmountable mountain of data) and if you do not leave any glaring holes, they have to nod and walk away.

Financial regulations are important, but the idea that regulators could every truly keep the financial markets from abusing the rest of us is nonsense. They can only do so much.

[scj]

What if the policy was that once a year, a set amount of people will be prosecuted? Kind of like setting quotas for speeding tickets... Where firms are ranked in terms of the volume/egregiousness of the actions committed.

Oh, and setup an anonymous tip-line. To allow other firms to "investigate" others in order to make themselves look better (might not happen every year, but I'd imagine it would be an option of last resort if something really bad needed to be covered).

Shady things will still happen, but there will be attempts to reduce it just enough so others take the hit. Plus, the public gets a few show trials to make them believe the regulators have teeth.

[ticviking]

Demand the market operate under rules that are comprehensible.

Doesn't solve everything here, but it probably helps a lot.

[sbov]

Is this mostly related to insider trading, or ways to get around other, broader things that are illegal?

[jonknee]

They probably don't give the interns the OpSec manual on avoiding the SEC...

[georgeecollins]

You want to know more? Here: https://www.amazon.com/Black-Edge-Inside-Information-Wanted/...

[mjfl]

I've read the beginning. I cringed a little at the cartoony portrayal of Steve Cohen as some sort of emo teenager. The author clearly hadn't consulted anyone close to him and I had doubts about the accuracy.