Matt Levine, Columnist

Hedge Fund Manager Profited From Death Arbitrage

It's gross, but grossness by itself doesn't violate securities laws.

August 16, 2016 at 11:30 AM UTC

Matt Levine is a Bloomberg Opinion columnist. A former investment banker at Goldman Sachs, he was a mergers and acquisitions lawyer at Wachtell, Lipton, Rosen & Katz; a clerk for the U.S. Court of Appeals for the 3rd Circuit; and an editor of Dealbreaker.

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A vital function of the financial system is to shift risk, but that is mostly a euphemism. Finance can't make risks go away, or even really move them all that much. When the financial system shifts the risk of X happening from Y to Z, all that means is that Z gives Y money if X happens. If X was going to happen to Y, it's still going to happen to Y. But now Y gets money.

Death is a central fact of human existence, the fundamental datum that gives meaning to life, but it is also a risk -- you never know when it will happen! -- and so the financial industry has figured out ways to shift it. Not in any supernatural sense, I mean, but in the regular financial-industry sense: by giving people money when death happens to them. One cannot know for certain how much of a consolation that is.