If markets are about perfect information, treat abusive practices like information pollution?

<![CDATA[John Reed, the guy saddled with saving the New York Stock Exchange from itself, has suggested a kind of superfund for paying back investors bilked by specialists who trade on their own accounts before acting on customer orders — the effect is that the specialists, people who act as market-makers for a specific stock, get the benefit of their knowledge a large number of sales are coming and can dump their stock first at a higher price. This is illegal activity, a violation of securities law.
Crime or not, Mr. Reed, who has a sterling record as the head of CitiGroup, says the firms that are guilty of these abuses should contribute to a superfund like the EPA uses to help pay for cleaning up polluted industrial sites. This money would be paid when the financial firms admit their guilt — back to self-regulation as usual.
Unfortunately, this whole idea hinges on the very people who committed these crimes going along with it. The Financial Times reports that Reed said in an interview: “If they [the specialists] are not willing to accept those [conditions], then forget it.”

“Yeah, I got your money right where I want it. In my fucking pocket!
I guess we can forget it, because few companies have demonstrated the willingness to admit they were wrong when it comes to pollution — what “right-thinking” financial services firm, whom we are supposed to trust with our money, will admit they are thieves?
Here’s what we should do: Throw the traders in jail and fine them in personal bankruptcy after a fair trial. Don’t destroy the companies themselves, since their assets are actually owned by the individual investors who put their money into the mutual funds. Just destroy the lives of the people who have made illegal profits with the college and retirement funds of ordinary people.]]>