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Insider Trading: A Humbling Decision

Two hedge fund managers who used to be employed by one of the world’s largest hedge-fund firms were recently charged with insider trading.  The charges came as part of the government’s wide ranging investigation into potential insider trading involving not only hedge-funds but also “expert-networks”.  According to an article on MarketWatch.com by Alistair Barr (http://www.marketwatch.com/story/more-insider-trading-charges-being-filed-2011-02-08), these men kept a log of inside information stored on a USB flash drive, and destroyed the external drives when the government’s investigation began closing in on them. Their employer fired them in 2010 for poor performance, and is cooperating with the investigation.  One of the persons charged has already pled guilty to one count of conspiracy to commit securities fraud and wire fraud, and a second count of securities fraud.

Throughout the course of time they were able to gather information on technology companies’ profit and loss statements, earnings, sales, product orders, and other information considered “material” or insider information.  They paid cash for the information, and allegedly netted millions of dollars as a result of their fraudulent activity. Other individuals have also been arrested on insider trading charges, and the government has raided several other hedge-fund companies beginning late last year.

I can almost guarantee you that these individuals never expected they would be charged with a crime. Their guilt will be determined by due process of the courts, but meanwhile, their lives have been changed, likely forever.  The world of hedge-fund managers is probably very similar to being in a pressure cooker.  Their role is to anticipate the future of the companies in which they invest in a way that maximizes profits for their funds, investors and employers.  Every bit of intelligence, every hint of information is critically analyzed and added to the equation of predicting the future.

They thrive in an environment of high risk and high stakes.  Their adrenalin rush comes from the huge sums of money they can make from a single transaction, the fortunes they control, and the sheer pleasure of winning.  The thrill from winning leads to the desire to do it again and again.  They crave the spotlight of success. They love standing on a pedestal. If they aren’t careful, they may find themselves playing a dangerous game, walking a tightrope, finding it difficult to pull back and make investment decisions without that “expert” information.

Luke 14:11 (NKJV) says “For whoever exalts himself will be humbled, and he who humbles himself will be exalted.”  People in positions of great power and influence are more vulnerable to making decisions or exhibiting behaviors that will ensure they not only remain in control, but that they increase in dominance and strength.  They may begin to feel that they’re above the normal rules by which others in their profession operate. They become addicted to the thrill of victory.  We’ve seen major political figures, corporate chiefs, entertainers and sports figures all go down this path.  One day they were heralded for their greatness, the next day they were shown on TV being led in handcuffs to a court arraignment….a process now known as the “perp” walk.

By the same token, those leaders in positions of great power who operate with humility, integrity, and a focus on giving to and serving others, will be lauded for their greatness.  Bill Gates and Warren Buffet are examples of such leaders. They’re worth billions of dollars, are shrewd businessmen, but have given more of their money away than they’ve kept.  They see their wealth as an opportunity to benefit those less fortunate than themselves. They understand the greater value of giving over receiving.

A familiar saying reminds us that “the higher you go, the harder you fall.”  So as a leader, make up your mind now whether you’re going to operate in piety or in humility, in receiving or in giving, in deceit or in honesty.

Motley Crew or Marvelously Capable

( Article first published as Motley Crew Or Marvelously Capable on Technorati.)

H-P recently announced a change in their board of directors as four people stepped down, and five new directors were appointed.These changes are considered significant in the wake of the scandal surrounding their former CEO, who left last year as a result of violations of their policies linked to an inappropriate relationship with a contractor. That was followed by the appointment last fall of a new non executive chairman, and a CEO.

Concerns about this newly appointed board as expressed by a variety of writers include some business relationships these new directors have with the CEO since several of them sit on various other boards together. More directly, Therese Poletti’s article in MarketWatch.com, H-P’s New Board a Motley Crew  on January 25, 2011 voices the concerns of some analysts and experts that the board “has become a haven for failed executives”, and identifies several new directors who exited their previous companies under not so positive circumstances. This, along with other aspects of H-P’s future plans, could cause concern for H-P’s investors if they’re not confident in the ability of the new board to lead the company to a successful future.

When we look at the leaders of companies where we’re investing our money, we typically want people with proven successful track records in the arena we’re focusing on. We want to minimize risks and optimize our future gain, and we don’t necessarily have the same view or perspectives as those who selected the leaders.We’re typically looking “in” or “up”, whereas those making the selection decisions are looking “down”. The position from which one is viewing is important here. Looking “in” implies that we’re on the outside, lacking complete information on the organization’s business and financial strategy and capabilities.Looking “up” suggests that while we may be on the inside, we’re not privy to all the information regarding the key criteria and experiences these leaders should possess. Finally, looking “down” means that we do have more knowledge and wisdom on the business needs and capabilities of who can fill them.So is the new H-P board really a “motley crew”, or are they “marvelously capable”?

Courtesy of Idea go

I’m reminded of another group of men who were hand selected and appointed as the leadership team for a service organization. They had no prior experience in the work they were asked to perform. They had the greatest respect for their leader, but for a while they didn’t really understand who he was or what he was doing.Though he spent a lot of time teaching them, they didn’t always understand his style of communication.They didn’t have the stamina that he exhibited.Though he expected them to do so, they couldn’t always replicate the things he did. Finally, one of their own leaked information that led to their leader’s capture and assassination, and they momentarily dispersed in fear.Some would have thought this was the end of that organization, but miraculously they rallied and came together again, stronger for their trials, and met to determine their next steps. After practicing and repeating all they had learned from their leader, they suddenly got it, and understood what he had been saying.

You’ve probably figured out that I’m talking about Jesus and His disciples. Why did he call fishermen and others to support Him in preaching the gospel and healing the sick?Who knows other than He looked “down” and in His infinite wisdom knew the deepest parts of their hearts.He knew what they were capable of doing.He didn’t call them based on who they were; he called them based on who they could become. He knew that he could use them in his service. They were anointed by God to form the first churches and lead thousands of people to salvation, carrying forward the gospel for future generations like us.

So in spite of the criticism and skepticism leveled at new leaders, rest assured that if they’re anointed by God for their position, their past is only a stepping stone for their future, and they can prosper in their new role, and lead their organization into victory.Though others may not see it, they may indeed be “marvelously capable” to excel in their role.

Copyright 2011 Priscilla Archangel, Ph.D.

Note: In the interest of full disclosure, H-P is a vendor of my employer, and one of their new board members also sits on the board of my employer.I have no business dealings or interactions however with H-P nor that board member.