Jeff Horwich: You might have seen the brother of Bernie Madoff pleaded guilty on Friday; he’s looking at 10 years in prison. All the white collar crime in the news lately seemed like good fodder for our regular date with Allan Sloan. He’s Fortune magazine’s senior editor-at-large. Hello, Allan.
Allan Sloan: Good morning Jeff.
Horwich: So we’re on the heels of two high-profile insider trading cases, Raj Rajaratnam and Gupta. And yet we still have all this supposed malfeasance related to the financial crisis, right. So, what I want to know is why these insider trading prosecutions but hardly any other prosecutions of the big fish on Wall Street?
Sloan: Well, because insider trading — it’s clear what it is and it’s pretty easy to prosecute if you have the evidence, which the government has. The financial meltdown that led to the Great Recession; well, stupidity, greed and overreaching when last heard were not criminal offenses. And it’s not clear how hard the government tried to find other things to go after some of the big fish.
Horwich: I’m really fascinated by this hazy line, as you just said, what’s a criminal offense, right, with insider trading or anything else. What’s illegal and what’s just reprehensible? Even after all of this, how much of Wall Street, do you think, dances in that zone?
Sloan: Well, you know, the question is: Where is good analysis become insider trading? I have no idea. The question also of the big financial meltdown; the thing I would look at if I were the government would be to see if the financial reports that were issued by some of the stricken institutions — before they went under — were in fact, bogus and misleading. That’s the kind of stuff they got Enron for, things like that.
Horwich: Do you join in the kind of schadenfreude when these titans get ruined and then carted off to jail?
Sloan: Well, it depends on who they are. I don’t want to see just show prosecution — just to have human sacrifices — to make people happy. But it is hard to believe that all of this bad stuff — to the tune of trillions of dollars — went on and nobody broke the law. But based again on what I’ve read these guys were clearly guilty and they were cheating other people; that’s supposed be an offense and apparently it still is and that’s a good thing.
Horwich: Fortune magazine’s senior editor-at-large Allan Sloan, thanks as always.
Sloan: My pleasure Jeff.
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