Information and Fairness

Insider trading is a classic example of the instrumental value of information and it reminds us of how markets are socially constructed (not in the sense that they are figments of the collective imagination but in the sense that they generally need the support of some social norms, rules, and laws in order to function well.)

The Times just reported (in "S.E.C. Accuses Mark Cuban of Insider Trading") that Mark Cuban, owner of the Dallas Mavericks, has been accused of selling all of his shares in a company a few hours after receiving confidential inside information suggesting the stock price would drop. At first glance it would appear that the "bottom line" is the monetary value of the information (that Cuban had but others did not), but consider how a source explained things, as quoted by the article's writer: "It is fundamentally unfair for someone to use access to nonpublic information to improperly gain an edge on the market." The "technical" reason for prohibiting insider trading is that markets can fail if people think others have private information, but this comment suggests that there's a social norm at work too: it's just not informationally fair.

Equality, Information and the Courts Redux: The Dan Rather Report

Dan Rather's lawsuit against CBS isback in the news*. The gist of the suit is Rather's claim that the network allowed political considerations (over his reporting on President Bush's military service) to influence their pressuring him to resign. Readers may recall I've previously commented on this lawsuit under the title "Courts and the Information Order."

The reporter on the story makes an important initial point, Rather's status as plaintiff permits him to access information that his status as reporter, employee or concerned citizen would never have given him access to.

"Using tools unavailable to him as a reporter — including the power of subpoena and the threat of punishment against witnesses who lie under oath — he has unearthed evidence that would seem to support his assertion that CBS intended its investigation, at least in part, to quell Republican criticism of the network."

This nicely highlights several "layers" of social information access. We ordinary members of the public are reading about this in the newspaper. Rather, as a reporter, could not access this information. Rather as a member of a bureaucratic organization was clearly kept out of certain loops. But Rather the plaintiff is formally, if temporarily, informationally equal to his adversaries. The two parties' "equality before the law" is partly enacted by the fact that one can say "you have to tell me" and the other one is compelled – by all of us – to tell him.

While the defendant (CBS) maintains that the case is "meritless" and that they will, in the end, prevail, Rather has already achieved a part of what he set out to do:

"One of Mr. Rather’s initial goals was to compel depositions of many of his former bosses and colleagues under oath. Thus far, in addition to Mr. Heyward and Ms. Mason, his lawyers have questioned Leslie Moonves, the chief executive of CBS; Gil Schwartz, executive vice president of communications for CBS; Sandra Genelius, a former CBS News spokeswoman; and Michael J. Missal, who helped oversee the panel report on behalf of Mr. Thornburgh."

The judge has not yet ruled on a motion "to gain access to several thousand documents that were used by the investigative panel to compile its report, including notes from interviews and e-mail messages from top executives."
Defendant lawyers claim it's just a "fishing expedition" and that information is privileged and something about which CBS should be able to say "you can't see it." Plaintiff lawyers say it is relevant to the issue at hand and as such it is something that an equal party should have access to it.

*NYT 16 November 2008, Jacques Steinberg: "Rather’s Lawsuit Shows Role of G.O.P. in Inquiry"

Notification on your Blackberry

A textbook perfect example of notification appeared on the front page of the NYT business section today. Geraldine Fabrikant tells the story of Sallie Krawcheck's leaving Citigroup("When Citi Lost Sallie") and a good bit of the story of the story has to do with how notifications were handled.

Long story short, Krawcheck was a top exec at Citi who was "shunted aside" in an internal shakeup in September. After speaking to colleagues at a corporate retreat she went back to her room and fired up her Blackberry:

"A friend had written to warn her that within a few days Citigroup would announce that it was stripping her of most responsibilities...."

The article goes on to note:

"[t]hat she was being shunted aside was not a surprise to [her].... What infuriated [her] was that the bank moved up its announcement without telling her...."

Plain vanilla notification. Even when it doesn't matter consequentially, it does matter to us when and how we find things out (or find out that others are finding out).

Apparently, though, her superiors were not being entirely crass. When she got back to New York she found a voice mail "formally notifying her that the timing of the announcement was being accelerated." Evidence then, that a phone message (presumably from (near) the horse's mouth) is preferred to finding out via a leak and rumor (I leave it to the reader to figure out where hearing such news face-to-face fits in this scheme).

And, from the organizational side, the idea that the threat of a spreading leak can create an imperative to officially announce was suggested by sources who told the reporter that the announcement was moved up "because news of it was already spreading."

Finally, we get a nice taste of how notification rights and obligations are organizationally structured and how they are regarded and disregarded in interaction. At several points in the article the reporter quotes anonymous sources who cannot be named because they are "not authorized to speak publicly about the company." Such disclosures are of course common -- how many times do you hear (or say) "OK, here's the info but you can't tell anyone I told you (because I am, in fact, not authorized to tell you)"? It tells us something about the information order that such departures from protocol do not disqualify a source. More importantly, it shows how the information order is built up out of a complex network of notification norms honored in practice and dishonored in rhetoric and vice versa.

Where Does the Information Go? Preserving a Sense of History

In the last few days I've read a number of blog posts and letters to the editor in which the writers expressed discomfort (a kind way of putting it) with the post-election enthusiasm of Obama supporters. My attention was drawn especially to those who clearly harbored a lot of resentment toward those celebrants who communicated a sense of the victory as a decisive one. The writers frequently called the supporters "arrogant" or "presumptuous" or similar. While I'm sure there have been some annoyingly boisterous winners, the losers were talking like this was a first time phenomenon unique to Obama supporters.

Hello?!? Does history really fade so fast or circulate so little that these writers completely forget how recent republican victories have been celebrated? Reagan's victories were touted as the end of an era, the obliteration of the 60s and the New Deal and his policies as self-evident. The excess and dismissive arrogance of the campus young republicans after Bush's 1988 election shocked me at the time. But more recently, in two elections that W barely (if actually) won, both he and his supporters paraded around talking about mandates and having political capital to burn.

And now, if I can, for one moment, engage in a little post election rhetorical excess of my own: of course it's not really a matter of history being forgotten or erased. It's just that the information in history's database can be hard to access from inside its dustbin.