ALBANY, NY (AP) – Former New York Attorney General Eliot Spitzer, who cracked down on insider abuses on Wall Street, said Wednesday that the new federal push against potential insider trading has the hallmarks of important work, if the innovative approach can prove the communication is illegal.READ MORE: Federal Arrest Warrant Issued For Gabby Petito's Missing Fiancé Brian Laundrie
But the former “Sheriff of Wall Street” and co-host of CNN’s “Parker and Spitzer” told The Associated Press it all points to a warning to regular folks hooked on day trading who can’t tap into Wall Street’s flow of insider information: “You’re not going to beat these guys at their own game.”
“Virtually everyone on the Street believes there are significant improprieties,” Spitzer said in an interview. “Trading in and out and thinking you can outperform these folks is a fool’s errand.
“If you are sitting there in front of a screen thinking your information is going to be good enough to make smart judgments that will permit you to outperform the hundreds of thousands of people on Wall Street who have access to better information and more timely information than you, you’re mistaken. It is simply not a level playing field.”
Instead, he said, individual investors should choose low-cost index funds and “be comfortable with long-term performance.”READ MORE: 'I Can't Take This Anymore': Heavy Rain In Tri-State Area Renews Flooding Concerns For Many Still Dealing With Damage From Ida
The investigation by the FBI and Securities and Exchange Commission may redefine insider trading itself. Investigators are believed to be pursing suspicions of trading by hedge funds and mutual funds that might have profited illegally using information not available to ordinary investors. Wall Street observers say the probe may be one of the biggest to hit the financial center, although concerns about insider trading aren’t new.
“There has always been significant concern that information flows on Wall Street gave insiders illegal advantage,” said Spitzer, who resigned as governor in a prostitution scandal in 2008. But he said technology now can reveal the brazen abuses that involved trades just before acquisitions and mergers based on inside information.
After similar whispers of abuse lingered for years on Wall Street, Spitzer — who served as attorney general from 1998 to 2006 — proved analysts were misleading investors on the value of stocks to lure investment banking business, among other conflicts of interests and insider abuses.
“There is now a whole new industry that SEC appears to be focusing on of people who traffic in information about businesses and the legal question — and it will be tough one — is whether this constitutes proper or improper trading,” Spitzer said.
“It is by no means an easy case to jump to the conclusion that all of this information flow is illegal. After all, that is what analysts on Wall Street are supposed to do,” he said. “Proving that it is inside information and you are acting in violation of law will be more complicated.”MORE NEWS: 1 Killed, 13 Injured In Shooting At Kroger In Collierville, Tennessee
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