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The ethics of lying, cheating, and stealing with data: A case study

I’ve been following with mild interest the recent news stories on the lawbreaking at the Steven A. Cohen hedge fund, for the silly reason that I gave a paid lecture for them a few years ago. I wasn’t thinking too hard about whether they would be using my wonderful statistical ideas to be more effective at insider trading . . .

Recently Paul Alper sent me an email pointing out that one of the lawbreakers involved is named Gilman—perhaps he’s related to me? Everyone is related to everyone else but I don’t know my relation to this particular guy. I actually have an aunt whose last name is Gilman. Here’s how it happened. A few years after my father was born (but before the birth of his sister), my grandfather changed his name from Gelman to Gilman. The story was that he was tired of people always calling him Gilman so he just changed his name. I’d call that a true commitment to the descriptive approach to linguistics. On the minus side, he gave my father’s older sister Lutheria, middle name Burbank (after the famous agriculturalist). She just always went by Lucy.

Getting back to the hedge fund scandal, Alper writes:

The article is fascinating on many levels: clinical trials, insider trading, failings of the medical profession, pernicious influence of money, need for recognition, mistakes of the elderly.

It does seem like the guy was overpaid. Murray Gell-Mann is probably getting $258,000 a year too, but I think he’s worth it.


  1. zbicyclist says:

    “The University of Michigan, where he was a professor for decades, has erased any trace of him on its Web sites, and is now reviewing its consulting policy for employees, a spokesman said.”

    Yes, pretend he was never here and announce you are reviewing policies. That will surely solve things.

  2. This Gilman doesn’t seem a liar or cheater, just a short seller.

  3. Jack PQ says:

    I find it puzzling someone would risk going to prison to increase his yearly income from $258,000 to $358,000. If anything, considering how much money Wall St made off him, Dr. Gilman was underpaid…

    Maybe the excitement and the thrill of being at the center of it all were addictive.

    • Andrew says:


      My guess is that, at some level, he didn’t believe what he was doing was truly illegal. He may have felt flattered by the idea that he was being paid big money for his medical expertise, just as those guys in “Inside Job” may have felt that their economic advice really was worth all that money.

      • K? O'Rourke says:

        It was not quite clear from the newspaper article (on the first page anyway) what was illegal (my guess is that Gilman had access to results of ongoing clinical trial that were not public).

        And here it often seemed that many folks in the survey felt that being paid big money for their medical expertise could not possibly affect them in any way and so it was not really anyone’s business.

        • They were his own clinical trials, but he tipped some traders before showing the negative results in public. _As long as his trials are good pieces of scientific work_ (key point, IMHO), I don’t see why an M.D. shouldn’t be allowed to profit from superior knowledge, just like everyody does in Wall Street.

          • zbicyclist says:

            It’s material inside information (i.e. whether the drug succeeded or failed would have a large effect on the stock price of the company, and the information is not available to the public), and it is abundantly clear that this is illegal. Gosh, I’ve sat through briefings on this topic at every company I ever worked for and it seems inconceivable to me that Gilman didn’t know.

            It’s also true that insider trading is seldom prosecuted and is difficult to prove.

          • Corey says:

            The dirty little secret of stock markets is that without noise traders, concerns about information asymmetry dominate and nobody trades. And if you want the noise traders to play, the game can’t be too obviously fixed, can it?

  4. jonathan says:

    Here’s a weird story: I have my father’s mother’s grandfather’s passport. He was born in 1855 and came to the US in the early 20′s. The name is different. Or rather, the name in the front is a version of the family name we know but the name he signed, the one in his actual handwriting, isn’t even close. The version on the front is Polish and the name the family uses is the Russian version, perhaps because being Russian was more prestigious. But the man’s actual last name is completely different, barely sharing a letter. What the heck happened? His granddaughter, my grandmother, entered this country under the name we know, the Russian one, but …? We’ll never know. So I have this passport in a glass case so I can see it open to the page with his picture and his signature.

    Another example of the unknowable. We have these few statistics but … And this person was as real to my grandmother as my grandmother was to me.

  5. Steve Sailer says:

    Gelman, Gilman, Gell-Mann, and Gillman (Sid, a pioneering NFL coach who revolutionized the aerial game from 1955 onward):

    It’s kind of like my name: I use iSteve and SteveSlr online because it’s asking a lot of people to remember the exact vowels in my last name. Is it Sailor, Saylor, or Seiler? All are about as common as Sailer. Also, I use Steve rather than Steven because that saves people from trying to remember whether it’s Steven or Stephen.