In today's newsletter, Matt Levine goes into great detail on various possible theories of prosecution. The TLDR:
I guess my answer would be that it might be illegal in all sorts of ways, but it is not obviously illegal, and if the U.S. Securities and Exchange Commission were to go after WallStreetBets for this stuff they will be breaking new ground and going beyond their previous cases. I do not want to say “this stuff is all fine,” but I will say I am not all that bothered by it.
He also discusses the new Leon Black/Jeffrey Epstein revelations:
After Epstein was arrested on sex-trafficking charges and died in jail, there was quite a bit of wild speculation about where his money came from, and specifically about why billionaires were so willing to pay him so much money for somewhat vague services. After all that speculation, finding out that Leon Black paid Epstein $150 million for differentiated advice that really saved him $2 billion of taxes is in some ways the most boring possible explanation.
At the same time … what? Why was Epstein, who was not a lawyer or an accountant or a college graduate for that matter, so good at tax? I actually don’t have too much trouble believing this—in my experience, some people are just born with a natural gift for tax structuring, and need surprisingly little formal training to achieve their potential—but it is fascinating. Black would go his lawyers and say “hey my guy found this way to save a billion dollars in taxes, is it legal,” and the fancy lawyers in the Paul Weiss tax department would say “wow, sure is, this is amazing, why didn’t we think of this, this guy is a Michelangelo of tax minimization”? I don’t know, it’s just a weird niche. Also what did Black actually do to save all those taxes?
More on WallStreetBets:
The GameStop squeeze is like if some dumb idiot on here announced that he made a bet that he wouldn’t get ratio’d and then everybody heard about it and replied all at once to take all his money.— vint SERP (@ZackMaril) January 26, 2021
TIRED: guy fawkes mask holding up a “we are the 99%” sign— sarah jeong (@sarahjeong) January 26, 2021
WIRED: a subreddit short squeezing an investment firm for the lulz