In “The Way Back to Iran” Mr. Cohen tells of how a young Iranian refugee quit the boardrooms of London to take a risky stake in the land of his birth. Mr. Nocera, in “Prosecuting Insider Trading,” says recent overturned convictions have changed the rules. Ms. Collins offers a “Dinner Party Political Primer” and says whatever you do, don’t confuse the cromnibus with the cronut, the pastry that’s half-croissant and half-doughnut at your holiday party. Here’s Mr. Cohen:
Rouzbeh Pirouz can still hear the raised voices, the sobbing. There was a list at Tehran airport. If you were on it you could not leave. Aged 7, he passed through the controls, after his mother. His father, a prominent businessman, did not follow. Agents of the newly birthed Islamic Republic stopped him, demanding that he provide an accounting of his activities under the shah. “Go without me!” he insisted. “Never!” Rouzbeh’s mother screamed. Over the head of the small boy, disabled by a neuro-muscular condition, a parental argument raged. They left in tears, without his father. It was 1980, a year after the Iranian revolution, the turning point in his life, the line of fracture. Everything changed.
Vancouver, a quiet place on the western edge of Canada’s vastness, became his home. His family, once no more than a few Tehran blocks apart, was scattered across North America and Europe. The family holdings — orange groves, a mine, property — were expropriated. His father handed over a pile of cash to the enforcers of Ayatollah Khomeini’s theocracy — and was allowed to go. He insisted that Farsi be spoken at home. His language, at least, they could not take from him. It was a link. But Iran was little more than an abstraction to the young Pirouz, a faraway country. “It was the place I’d left,” he says, “and would never go back to.” He went to Stanford, then on to Harvard’s Kennedy School, then to Oxford with a Rhodes scholarship. He imagined for himself a comfortable North American life.
Ayatollah Khomeini globalized Iranians. They were thrust, like Pirouz, from their family circles. The dispersal was painful. The culture, habits and landscape of Iran lay too deep in the new exiles to be completely erased. They adapted, were often successful, and acquired a worldly sophistication. Some ventured back, yielding over time to the tug of memory, whether personal or transmitted. They stayed a few days, or weeks, or perhaps longer, and discovered a country full of vitality, somehow familiar, yet isolated and repressive. The revolution sent Iranians into the world but severed Iran from it. Diaspora and homeland diverged. For those who had fled the Islamic Republic it was very difficult, if not impossible, to connect their new lives to the old.
Such connection, if established, could be a game changer in these troubled times of fracture, doldrums and beheadings. Iran, 35 years after the birth of the Islamic Republic, is the great outlier of the global economy, the last sizeable emerging market to stand apart from integration. Iran’s economy, despite sanctions and isolation, is one of the world’s 20 biggest; its gas reserves are the world’s second-largest. “It will make a gigantic difference when an economy this size joins the world, with implications for both Western and Asian economic interaction,” said Hamid Biglari, who left Iran in 1977 to study in the United States and went on to become the vice chairman of Citicorp, before setting up his own investment company. “A black hole will be connected to the rest of the universe.”
That is the objective for which Pirouz now works. Iran surfaced in his psyche out of nowhere. He was at Oxford, casting around for a subject for his doctorate. A professor suggested Iran; the idea was tempting enough to coax him back to the scene of childhood trauma. On arrival in Tehran he looked around and for the first time in his adult life saw a lot of people who looked like him. His home was gone, yet some sense of comfort remained. Nowhere else felt quite as familiar. Then chance intervened: a fellow Oxford student’s idea for an Internet business, the heady late 90’s dotcom madness, the herd instinct of people plowing money into the company, a timely sale before the crash. The head of his Oxford college, Sir Keith Thomas, thought Pirouz was mad to give up his doctorate for digital shenanigans. “For God’s sake,” he said, “surely you can get a deputy to do this for you!” But Pirouz made the right call. Not yet 30, he found himself with enough to be very comfortable and acquire an office in Mayfair.
He was quickly bored. Money rained down on central London as if a helicopter had unloaded buckets of the stuff. There were thousands of people like him; in Iran there would be very few. When he talked of his itch to go back, friends said he was crazy. His parents were desperately worried; this would end in tears. London attracts global money because there’s the rule of law. In the Islamic Republic, one could disappear into a building with no address, no name, no marking on the door, and sit facing a wall while the same questions and accusations were repeated week after week. The risk was always there.
But the opportunity to do something meaningful, to change ways of thinking in a country where some 60 percent of the population is under 30, was huge. Conspiracy theories are fundamentally paralyzing because their message is that whatever you do, it will not make a difference. Iran, with its history of periodic domination by outside powers, was awash in them. “Iranians never subscribe to the face-value theory of analysis,” Pirouz says. “It might help them if they did.” He decided to invest in the country and its youth to demonstrate that change was possible.
Tehran became Pirouz’s principal home. He set up an investment fund, Turquoise Partners (in time for a bull run on the Iranian stock market that lasted several years), and then devoted his energy to his pet project, the Iranian Business School (IBS), conceived in 2007. Iranians, he had found, are good traders but poor managers. Inefficiency is rife in a bloated state sector. Engineers are given management jobs without having any idea how to manage. Knowledge of the global economy and best practices is scarce. In all, the need for knowledge of advanced business management concepts in a country isolated for 35 years was patent.
So the school, loosely modeled on the Indian School of Business in Hyderabad, and the China Europe International Business School in Shanghai, made sense. As with India and China it could help, at the right moment, to propel Iran into the global economy. Classes, which started in 2010, offer postgraduate training to future business leaders; hundreds of Iranian men and women have already attended. A significant expansion is now underway. On Oct. 4, 2013, the school received an Office of Foreign Assets Control license from the U.S. government, allowing it to raise money as a charity in the United States, bring American faculty to teach in Tehran and pay them. It is a bridge where very few exist.
“The school will help raise awareness within the Iranian-American business community and open avenues for them to contribute,” Biglari, who chairs the American board of IBS, said. To Pirouz, such connections are critical. They could constitute a turning point. He has always believed that isolating Iran only serves the hard-liners in the end. Sanctions have hurt Iran but you can find the latest iPhone in Tehran at a price: Cartels aligned with the Revolutionary guards grow fabulously wealthy smuggling from Dubai. “An Iran integrated in the global economy, with a growing private sector, will be good for Iran and the world,” Pirouz says. He is committed for the long-term. Haste, goes an Iranian saying, is the devil’s work.
There is an enormous amount to be done. Mismanagement has been the curse of Iran. Banks, obliged to make nonperforming loans to state companies, are largely insolvent. A privatization program was bungled. There are water shortages. The Internet goes out all the time. The nuclear program, the object of the overwhelming bulk of attention paid to Iran, has itself been a colossal exercise in mismanagement, whatever else it may be: The cost of generating electricity from the nuclear facility at Bushehr has been beyond astronomical. A young population is frustrated, tired of Iran’s pariah status, and eager to join the world, as President Hassan Rouhani has promised it will.
This is a world, increasingly, of surface conflict and hidden connection. Of course, in the event of global war, the former will crush the latter. Short of that, it is important to see events on two levels — the confrontations between states and the cooperation between citizens empowered by technology and often, in this age of massive migrant flows, tied by family across continents. Pirouz is one such active citizen.
The Iran debate is always framed in the context of confrontation. Entire cottage industries deploy themselves with ardor to fan conflict. But Iran’s isolation serves nobody. There are real strategic differences between the Islamic Republic and the West that may still frustrate attempts to move beyond the nuclear issue and begin a process of fruitful reintegration. These ideological differences, however, are no greater than those between China and the United States at the time of the Shanghai Communiqué of 1972. It is this belief — in the benefit of connection and the sterility of separation — that has prodded Pirouz into an unlikely return. In the right circumstances, many in the diaspora could follow. Individuals can still defeat entrenched interests and lobbies, good sense prevail over the shallow cacophony.
“Did I come home? Not exactly,” Pirouz says. “The world of my childhood is gone. But I discovered in myself a great yearning for Iran that I did not want to sacrifice to assimilation.” Even his father now spends time in the country that took everything from him. It is, despite everything, his. What remains, for the completion of this story of full circles, is for Iran to return to the world. It is past time.
Now here’s Mr. Nocera:
In the summer of 1991, the United States Court of Appeals for the Second Circuit overturned the conviction, for stock manipulation, of a man named John Mulheren.
Mulheren was a stock trader who had been arrested three years earlier, at the behest of Rudolph Giuliani, then the U.S. attorney for the Southern District of New York. Although Mulheren’s actual indictment didn’t take place until a few months after Giuliani left office, the case was still considered part of his legacy. As U.S. attorney, Giuliani had gone hard at Wall Street, forcing a guilty plea from Michael Milken, the most important financier of his day, and getting Ivan Boesky, a well-known arbitrageur, to turn state’s evidence. According to The Los Angeles Times, by 1988, Giuliani had brought five times as many insider-trading cases as had ever been brought before in his district.
The Mulheren case spoke to another part of Giuliani’s legacy, however. There were examples of Giuliani forcing Wall Street executives to make well-publicized perp walks and then never bringing charges. Defense lawyers complained of heavy-handed tactics, and cases that were brought with scant evidence. Indeed, the evidence against Mulheren was so thin that the Second Circuit’s unanimous decision said that “no rational trier of fact could have found the elements of the crimes charged here beyond a reasonable doubt.” The New York Times described the ruling — and several other reversals that had preceded it — as a “stinging blow” to the U.S. attorney’s office.
On Wednesday, 23 years later, the very same appeals court made a very similar ruling in overturning the convictions, for insider trading, of two hedge fund executives, Anthony Chiasson and Todd Newman. This time the U.S. attorney for the Southern District was Preet Bharara, who, like Guiliani, has built his reputation by prosecuting Wall Street wrongdoing, primarily insider trading. He put Raj Rajaratnam, the hedge fund big shot, in prison for 11 years. He gained a conviction against Rajat Gupta, a former top executive at McKinsey, the august consulting firm. In all, Bharara has ensnared almost 90 people who have either been convicted of, or pleaded guilty to, insider trading.
But as the reversal on Wednesday suggests, Bharara, like Giuliani, has sometimes gotten out ahead of his skis, bringing indictments that were not necessarily warranted by the evidence. Judge Barrington Parker, who wrote the Second Circuit’s decision, was scathing in his appraisal of the evidence, saying that there was no proof that the two “tippees” (as they are called in the ruling) knew they were trading on insider information, or that the tippers, who worked at Dell and Nvidia, had received any personal benefit for their tips. The court reversed the case “with prejudice,” meaning that Bharara won’t be able to retry the two men.
Here is the dirty little legal secret about insider trading: It’s not always illegal. In fact, there is no law on the books banning the practice; rather, it comes under the general purview of securities fraud. Over the years, prosecutors and the Securities and Exchange Commission have worked to expand what constitutes insider trading — and there have been times when the courts have refused to go along. Indeed, in his ruling, Parker relied on Supreme Court decisions that an insider trade was against the law only if the tippees knew they were getting inside information — and that they also knew that the tipper got a personal benefit from his leak.
Yet in the cases of Chiasson and Newman, the original tippers were never prosecuted for insider trading. “That is what was so baffling,” said Peter J. Henning, a law professor at Wayne State University who writes the White Collar Watch column for Dealbook in The New York Times. “How do you not go after the tipper?” In effect, said Henning, you can’t have a corrupt tippee if you don’t have a corrupt tipper. What’s more, Chiasson and Newman received the information third- or fourth-hand, and they had no idea who the tippers were. So how could they know if the tippers had done something corrupt?
Does this mean that Chiasson and Newman were paragons of virtue? Not necessarily. They could very well have known they were trading on inside information. Even so, given the court’s definition of insider trading, they were free to trade on that information. That is what Bharara ignored in bringing those cases. (A third Wall Street trader, Michael Steinberg, who worked for Steven Cohen’s hedge fund, SAC Capital, is also likely to have his conviction reversed on the same grounds.)
At a Dealbook conference this week, Mary Jo White, the chairwoman of the S.E.C., fretted that the Second Circuit’s ruling was “overly narrow.” And, in his statement after the ruling, Bharara said that he feared it would “limit the ability to prosecute people who trade on leaked inside information.”
That’s true, of course, if you agree with their definition of insider trading. Unfortunately for them, the courts don’t.
And now here’s Ms. Collins:
The burdens of being an Informed Citizen are many. This weekend, you’ll probably be going out to some holiday party or dinner where your friends will expect you to have an opinion about the monster spending bill that’s been staggering through Congress.
Consider this an opinion primer.
The bill is called the cromnibus. That’s Congress-speak for continuing resolution and omnibus. You do not need to know about this. However, it is crucial that you avoid confusing the cromnibus with the cronut, a pastry that’s half-croissant and half-doughnut. “Like the cronut, but less delicious,” twittered Ashley Parker of The Times.
The worst thing in it is a section — dropped into the 1,600-page measure at the last minute without any hearings — that allows banks to use their customers’ federally guaranteed deposits to buy credit default swaps. Also other investments with impossible names that we learned to hate during the Wall Street bailout.
Most of the language in the section came directly from Citigroup. I rest my case.
The second-worst thing in the bill allows rich people to make up to $1.5 million in campaign contributions every two-year election cycle. Or $3 million if they happen to be a married couple. God knows how much if they happen to be a wealthy extended family.
Republican leaders suggested this was necessary in order to provide $12.6 million for pediatric cancer research. I am not even going to try to take you down the creative path that led to this connection. You don’t want to bring it up at a dinner party anyway because it will cause the other guests to start throwing food.
Let’s zero in on something simpler, like tired truck drivers.
Yes! The bill loosens the rules that currently limit drivers to 14 hours of work a day, 11 of which can be behind the wheel.
Already, I feel you getting worried, gentle reader. Yes, the person in that monstrous vehicle that’s passing you on the highway at what appears to be about 150 miles an hour may have been sitting there for 10-and-a-half hours, in a marathon he began after three hours of effort on the loading dock.
Last year, Congress reduced the maximum amount of time a driver could be on the road from 82 to 70 hours a week. Then, during the mandated rest period, said driver had to have two consecutive days during which the early morning hours of 1 to 5 a.m. were available for sleep.
“These new rules were adopted after a very thorough, time-consuming administrative process. In fact too time-consuming,” said Senator Richard Blumenthal of Connecticut. He leads a subcommittee on surface transportation that conducted multiple hearings on this very matter.
We’ve really hardly gotten started on the new rules. Yet here in good old cromnibus, there’s a provision returning to the old way of doing business.
The sponsor of the change is Susan Collins of Maine. We generally think of Collins as an extremely sympathetic figure, given that she’s possibly the entire Moderate Republican Caucus in the Senate.
She is also the sponsor of another controversial provision in the spending bill, which requires the Women, Infants and Children program to allow low-income pregnant women and mothers to buy white potatoes with their government food money. We had a long phone conversation about this matter, and I have to tell you that Collins is very forceful on this subject. Her bill is only about raw potatoes, not French fries or chips. And WIC will let you buy iceberg lettuce. And did you know that they subsidize potato purchases at farmers’ markets but not grocery stores? It’s way more complicated than you think.
As to the truck drivers, Collins thinks that instead of doing a study on how well the new rules work, we should go back to the old plan and study that. And, anyway, the 1 to 5 a.m. rule “pushes truck traffic into the early morning rush hour.” This is an excellent topic for dinner-table discussion. Would you rather share the highway with a truck whose driver has messed-up circadian rhythms or a truck that’s in front of you when you’re trying to get to work in the morning?
Meanwhile, during the Senate debate, a Democrat gave Collins particular credit for getting more money for mass transit and airport improvements. “It is a compromise piece of legislation,” Patty Murray of Washington reminded her colleagues.
True that. It’s been so long since we had any big compromises that we’ve forgotten how unappetizing they look. Is this one worth it, people? Would you trade better airport traffic control for fewer drivers who get overnight shut-eye? Would you kill off campaign finance reform to save the Obama immigration and health care programs? Let me know how the dining room votes.
And no matter what the result, that thing about the banks is really terrible. Worst. Holiday. Present. Ever.