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Matt Levine

Senator Wants to Protect Investors From Steve Cohen

It's not so clear that the investors want to be protected from him though.

I don't get all that worked up about insider trading, but let's assume for a moment that it is bad and that Steve Cohen did it, or at least failed to supervise people who insider traded while working at his old hedge fund, SAC Capital.  What is the right punishment? Obviously prison, beheading, etc. might be options. But on this assumption, the basic bad thing that he did was trade, so we might want the punishment to be related somehow to his trading. (Or: The basic bad thing that he did was supervise traders, so we might want the punishment to be related to his supervising of traders.) One could imagine, for instance, banning him from trading for a while, or forever, because his trading was bad.

But that isn't what happened, because banning someone from trading is in practice, in 21st-century America, unthinkable. It is just not a remedy that is available to the Securities and Exchange Commission. How would you even do it? Buying and selling stocks is the all-American thing to do with your money; barring people from trading stocks would be like barring them from using the Internet, or owning guns.