And If the NSA Invested in the Stock Market?
Published in El Confidencial
(Spain) on 30 October 2014
by Kike Vázquez (link to original)
(Spain) on 30 October 2014
by Kike Vázquez (link to original)
Translated from
by Mayra Reiter.
Edited by Bora Mici.
Let our imagination take flight. Let’s say that one day the all-powerful National Security Agency, an American intelligence agency focused on information gathering, decided to invest in the stock market. Hard to believe? If it analyzes data on billions of people, taps into our mobile phones, knows what we search for on Google, and even knows some of our leaders’ darkest secrets, why not use that power in a market where information is the most valuable asset? It is not ethical or just, but neither is spying on us without our consent, and on the other hand, it appears to be a very efficient way to earn money or influence markets. Seriously, nobody has thought that something like this could actually happen?
While somebody hands the script over to Christopher Nolan, let’s go back to the real world because, even if the NSA, as an agency, does not invest in the stock market, there is somebody very close to it who does: its employees. If this is hard to believe, do not miss the following article from Oct. 22, 2014 in Foreign Policy, “Why Was the NSA Chief Playing the Market?” — where light is shed on something as opaque and unknown as the trades made by one of its top leaders. After scandals such as PRISM, the published information has once again sown distrust in people regarding the use and management of confidential information.
Let’s go to the facts. Keith Alexander, NSA director for over eight years, traded stocks and assets linked to China or Russia at the same time that he investigated those countries, and invested in numerous companies that were linked sector-wise to the agency as well. According to Foreign Policy, Gen. Alexander’s stock portfolio was relatively commonplace when he started working for the NSA since it had several mutual funds and some technology stocks — yes, he probably knew these well too, but they are so common among investors that nobody would find the position strange. Everything was very normal until one day he decided to embark on slightly more exotic stocks. From mutual funds and technology, he went into potash and aluminum.
Alexander did not do anything wrong, at least legally speaking, since all investments have to go through the filter of an ethics committee and be reported to the American government every year thanks to the Ethics and Government Act — thanks to which we have learned about this [transaction]. In addition, the amounts of the various trades were relatively low; $15,000 at most in each foreign company and up to $50,000 in American companies, not attaining “reportable income” with them. All this is relatively normal, except the nature of the investments themselves.
According to Vice News — “These Are the Financial Disclosure Forms the NSA Said Would Threaten National Security” of Oct. 10, 2014 — an outlet that has fought prominently to get information that had been restricted until now on national security grounds, the activities of the companies chosen by Alexander are not random. “World leader in cloud solutions,” “data gathering and research,” “develops software that improves the quality of images captured by surveillance cameras,” “amplifiers for [radio frequency] air traffic control, radar, and surveillance.” No, Alexander’s investments were definitely not random, and all seem to be very linked to the knowledge he acquired as NSA director.
But his ties to certain emerging countries may be even more remarkable, for example, entering markets as opaque as potash, which is apparently cartelized and controlled, and which very few investors dare enter. This market, like that for aluminum, in which he was also interested, is closely linked to China because the Asian giant has made great efforts in the last few years, both in agriculture and industry. According to Foreign Policy, at the same time Alexander invested, the NSA focused its research efforts on the governments and corporations of China and Russia.
His trades were not economically successful since he obtained “no reportable income,” as we have previously said, but neither did he appear to handle bad information since he sold his shares several months before the potash collapse in 2008. Was he aware of the impending crisis? Did he use confidential information? In any case, the situation becomes even more complicated because Alexander not only had stock in strategic sectors, but he even invested in a Chinese company expressly singled out for stealing information from American corporations. There is a slight conflict of interests when you invest in a company that steals information if your job is to prevent that.
You may agree with me that the problem is not so much the profit that may have existed, but the potential damage that this behavior may cause. We are not talking only about buying or selling in the stock market and earning extra money this way, we are taking about handling confidential information and profiting from it. In fact, there is a heated dispute in the U.S. over up to what point was it legal for Alexander, after leaving the NSA, to have created an information security consulting company that charges $1 million per month for its services: a very dignified form of earning a living for some; for others, it creates doubts over whether the actual business is the sale of confidential information.
What is really important about making news like this known, in addition to the need to know the truth, is that our society has a debate pending on the treatment of confidential information. Where are the barriers? Would it be justifiable for the NSA to invest in the stock market? Would it be justifiable if it was done to protect the market from a “systemic attack” or some other similar argument? Would it be justifiable if it was done not by the NSA, but by its employees? Is it justifiable for employees to be able to make trades as controversial as Alexander’s? Where is the limit? Is anything allowed? If we do not make the decision, others will do it for us.
While somebody hands the script over to Christopher Nolan, let’s go back to the real world because, even if the NSA, as an agency, does not invest in the stock market, there is somebody very close to it who does: its employees. If this is hard to believe, do not miss the following article from Oct. 22, 2014 in Foreign Policy, “Why Was the NSA Chief Playing the Market?” — where light is shed on something as opaque and unknown as the trades made by one of its top leaders. After scandals such as PRISM, the published information has once again sown distrust in people regarding the use and management of confidential information.
Let’s go to the facts. Keith Alexander, NSA director for over eight years, traded stocks and assets linked to China or Russia at the same time that he investigated those countries, and invested in numerous companies that were linked sector-wise to the agency as well. According to Foreign Policy, Gen. Alexander’s stock portfolio was relatively commonplace when he started working for the NSA since it had several mutual funds and some technology stocks — yes, he probably knew these well too, but they are so common among investors that nobody would find the position strange. Everything was very normal until one day he decided to embark on slightly more exotic stocks. From mutual funds and technology, he went into potash and aluminum.
Alexander did not do anything wrong, at least legally speaking, since all investments have to go through the filter of an ethics committee and be reported to the American government every year thanks to the Ethics and Government Act — thanks to which we have learned about this [transaction]. In addition, the amounts of the various trades were relatively low; $15,000 at most in each foreign company and up to $50,000 in American companies, not attaining “reportable income” with them. All this is relatively normal, except the nature of the investments themselves.
According to Vice News — “These Are the Financial Disclosure Forms the NSA Said Would Threaten National Security” of Oct. 10, 2014 — an outlet that has fought prominently to get information that had been restricted until now on national security grounds, the activities of the companies chosen by Alexander are not random. “World leader in cloud solutions,” “data gathering and research,” “develops software that improves the quality of images captured by surveillance cameras,” “amplifiers for [radio frequency] air traffic control, radar, and surveillance.” No, Alexander’s investments were definitely not random, and all seem to be very linked to the knowledge he acquired as NSA director.
But his ties to certain emerging countries may be even more remarkable, for example, entering markets as opaque as potash, which is apparently cartelized and controlled, and which very few investors dare enter. This market, like that for aluminum, in which he was also interested, is closely linked to China because the Asian giant has made great efforts in the last few years, both in agriculture and industry. According to Foreign Policy, at the same time Alexander invested, the NSA focused its research efforts on the governments and corporations of China and Russia.
His trades were not economically successful since he obtained “no reportable income,” as we have previously said, but neither did he appear to handle bad information since he sold his shares several months before the potash collapse in 2008. Was he aware of the impending crisis? Did he use confidential information? In any case, the situation becomes even more complicated because Alexander not only had stock in strategic sectors, but he even invested in a Chinese company expressly singled out for stealing information from American corporations. There is a slight conflict of interests when you invest in a company that steals information if your job is to prevent that.
You may agree with me that the problem is not so much the profit that may have existed, but the potential damage that this behavior may cause. We are not talking only about buying or selling in the stock market and earning extra money this way, we are taking about handling confidential information and profiting from it. In fact, there is a heated dispute in the U.S. over up to what point was it legal for Alexander, after leaving the NSA, to have created an information security consulting company that charges $1 million per month for its services: a very dignified form of earning a living for some; for others, it creates doubts over whether the actual business is the sale of confidential information.
What is really important about making news like this known, in addition to the need to know the truth, is that our society has a debate pending on the treatment of confidential information. Where are the barriers? Would it be justifiable for the NSA to invest in the stock market? Would it be justifiable if it was done to protect the market from a “systemic attack” or some other similar argument? Would it be justifiable if it was done not by the NSA, but by its employees? Is it justifiable for employees to be able to make trades as controversial as Alexander’s? Where is the limit? Is anything allowed? If we do not make the decision, others will do it for us.