Legalise insider trading

According to him, it wasn’t the whistleblowers who exposed Enron—they had nothing to gain. It was the steep drop in the stock price that exposed the company. Friedman thinks that if there was no insider trading law, then insiders would have an economic incentive to short the stock and leak negative information and it will immediately alert investors and regulators to wrongdoing.

He says, “one of the reasons that we had Enron, Worldcom and so on was because of excessive government controls and regulations of insider trading and of their (insiders) activities in general”.

Undoubtedly, Friedman’s views will be widely debated by ‘insiders’ and regulators in the coming weeks. It may also bolster the campaign of those who think that the Sarbannes-Oxley type of legislation is excessive and stifling for companies.

But it is unlikely that retail investors in America will ever permit a situation where insiders first create a gigantic fraud and then make more money by encashing their stock options and bailing out before it sinks.

Drumming a recovery

Last week Vijaya Bank’s employees were at it again—holding demonstrations to shame defaulters into repaying their loans. Over 70 employees held a demonstration outside the office of a delinquent finance company in Mumbai and embarrassed it. Similar road shows that were conducted in Coimbatore, Pune and elsewhere had netted the bank over Rs 7.5 crore a couple of months ago.

As laudable and effective as the bank’s strategy is, one would be a lot more comfortable if it found a way to outsource the ‘embarrassment-making’ demonstrations. The thought of all bank officials including branch managers standing outside defaulters’ premises with placards and banners makes us wonder about their routine banking functions and customer service.

Retaining loyalty

Indian Airlines passengers would agree that its service and timeliness has improved dramatically due to competition from private airline. Yet, there are those who refuse to travel Indian Airlines (IA) unless there is no option.

That’s because IA does almost nothing to build the loyalty of regular travellers. For instance, all private airlines offer upgrade coupons to economy class frequent fliers after they have logged in a certain number of flying miles. But not IA.

Not even if its business class has more empty seats than the private airlines. Private airlines are also more generous with free tickets within the country. IA offers a desh-videsh scheme, but very few have enough miles to qualify for the tickets.

Its attitude may have to do with the fact that it is assured a base capacity because all public sector and government employees are forced to travel IA. But it is a sure way to drive away those who prefer travelling IA even when they don’t have to.

Getting other views

According to Publishers’ Weekly, the Iraq situation is forcing Americans to bone up on dissenting views. All of a sudden, books of political dissent by authors such as Noam Chomsky or Gore Vidal and titles such as ‘War on Iraq’, or ‘TARGET IRAQ: What the News Media Didn’t Tell You’ are moving faster off the shelves as people are looking for better information than what their government is feeding them through the media.

But before you think that sale statistics on dissenting views mark a change trend, think again. Conservative books pushing the jingoistic American worldview are still selling three times as much and provide the rock solid support base for George W Bush.

Tailpiece: Last week, Sebi officials moved into the NSE (National Stock Exchange) building. The space-starved regulator, which will now have two new full time members on its board, has hired additional office space in the NSE building at the upmarket Bandra-Kurla complex in Mumbai. Hearing this, a wag says, “NSE will now have to give up its seven-year long complaint about step-motherly treatment; and other bourses can step up their grousing about NSE’s monopoly moves. Fortunately, Sebi will move into its own office building at Bandra in the next few months and put an end to any such unpleasant speculation”.

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