MacFADYEN: A Fitting Penalty?

April 24, 2008

I did a quick search on Google News and came up with a few convictions from recent court cases. I thought it would make for a fun exercise to match up which penalties fit which crime:

    The Crimes
* Stealing gasoline from city buses
* Stealing golf carts from a country club
* Manipulating stock prices through false M&A rumors

    The Penalties
* Sixteen months in state prison
* Thirty days in jail
* A fine and a settlement in which nobody admits to any wrongdoing

Okay, so the exercise wasn’t all that fun. And I’m assuming that it was pretty easy to figure out that each crime matched up sequentially to the respective penalty (which actually makes the exercise pretty lame.) But the point, I’m hoping, is that people should see there’s something wrong with the fact that siphoning gas results in jailtime, while manipulating the stock market doesn’t even yield an apology.

The SEC on Thursday, agreed to a settlement with Paul Berliner, a prop-desk trader at Schottenfeld Group, who spread false rumors that Blackstone would lower its bid for ADS. He profited on the rumors to the tune of $25,000. But his penalty was disgorgement, a fine and he is barred from working at a brokerage firm. Boo. Hoo. The fine, I would guess, doesn’t even come close to the profits he’s made on past transgressions. 

I don’t think he deserves to hang for his sins, but let’s at least get an admission out of the guy. Next to Jerome Kerviel, Berliner’s crime might seem small, but $25,000 is still a lot of golf carts.