Another email I got this morning:
Ramesh, you are letting me down, what Martha did was sell a stock she was sure was going to go down to someone who did not have access to the same information that Martha did. If I sell you my car at full price knowing that the transmission is going to fall out in the next few hundred miles but say nothing about it, did I do something wrong? As much as I like the principle of caveat emptor, the government is there to hopefully protect you from my fraudulent behavior.
My response: Just to clarify, I’m not saying that Stewart shouldn’t be facing jail time. (I thought Jay Nordlinger got the issues just right the other day.) I was responding to one specific argument.
But let’s follow up my correspondent’s thought. First of all, in the hypothetical situation he mentions, we would have a civil action, not a criminal prosecution, right? Second, a better analogy would be: I have reason to think that the government is going to impose a recall of that car in the future and don’t tell you that. It seems to me to be a different situation. But let’s say you disagree. Let’s think up another analogy. Let’s say I have read a report on a company that is publicly available but that you haven’t read. Knowing what’s in that report, but not mentioning it to you, I sell the stock to you. Does this action, too, deserve criminal prosecution? Why not, on my correspondent’s theory?