I've never thought of the implications of market sabotage until the arrival of Polymarket and Kalshi. Most people who play the stock market are educated, informed, and upper class. They are not psychopaths. They have impulse control. When you open up gambling markets to the masses, you're going to invite much more anti-social behavior. There may be differences in personality between stock traders and sports betters. I'd like to see a history of horse poisonings, not CEO poisonings.
In the early 2000s, MI6 had a very successful track record of stopping these sorts of market saboteurs, but lately their interest seems to have shifted to bioterrorism and diversity hiring.
More seriously, I wonder how much our perceptions of the frequency of market sabotage are distorted by fiction and by high-profile similar cases in sports.
The ransomware angle is underrated here. Shorting a stock and then hitting the company with a ransomware attack is way harder to trace than old school sabotage, and you can pull it off remotely without physically burning anything down. The fact that this is basically the only successful modern example tells you that detection risk is still the main blocker, not the economics of it.
Not all actions harmful to a company are legally prohibited, just as not all actions that benefit a company are legally required. If that were true, it would mean the government would be dictating every aspect of company policy, which defeats the point of having a market in the first place.
We cannot catch all instances of market sabotage by looking for blatant violations of law. The absence of such violations does not mean sabotage is not going on.
What are some examples of legal ways to harm a business? Suppose business A opens a location competing with business B. Decision-makers in business A have an incentive to short stock in business B before doing this.
Suppose business A is about to open a facility that has negative externalities that discourage certain other local businesses, such as a factory producing a lot of pollution, an airport producing a lot of noise reducing nearby property values, or a liquor store or casino which may increase crime and decrease the appeal of the area. Decision-makers in business A then have an incentive to short stock in the affected local businesses.
Suppose a legislator is considering a bill that would harm business A. The legislator has an incentive to short stock in business A before passing the bill. If the legislator is listening to a lobbyist from an opposing business, the lobbyist and his backers also have an incentive to short stock in A, once they are confident the bill will be passed.
I don't have that data, but you are the one making the claim that market sabotage is rare. If you want to substantiate your claim, the burden of proof on you to find data showing these things don't happen. If there's a rational incentive for people to do something, the initial presumption is that at least some of them do it.
For at least one of the cases I mentioned, it's well known that ranking members of Congress use their insider knowledge of what bills will be passed to make millions investing in the stock market, beating the Dow Jones. It would be surprising if shorting stock wasn't one of the tactics they use to do that.
I've never thought of the implications of market sabotage until the arrival of Polymarket and Kalshi. Most people who play the stock market are educated, informed, and upper class. They are not psychopaths. They have impulse control. When you open up gambling markets to the masses, you're going to invite much more anti-social behavior. There may be differences in personality between stock traders and sports betters. I'd like to see a history of horse poisonings, not CEO poisonings.
In the early 2000s, MI6 had a very successful track record of stopping these sorts of market saboteurs, but lately their interest seems to have shifted to bioterrorism and diversity hiring.
More seriously, I wonder how much our perceptions of the frequency of market sabotage are distorted by fiction and by high-profile similar cases in sports.
The ransomware angle is underrated here. Shorting a stock and then hitting the company with a ransomware attack is way harder to trace than old school sabotage, and you can pull it off remotely without physically burning anything down. The fact that this is basically the only successful modern example tells you that detection risk is still the main blocker, not the economics of it.
Any data on this? For example, what percentage of ransomware attacks which you hear about pretty regularly nowadays have the ransoms paid?
"But such sabotage almost never happens."
Like the shorting of United and American Airlines stock just before 9-11.
which didn't happen by anyone who knew of the coming attacks
Not all actions harmful to a company are legally prohibited, just as not all actions that benefit a company are legally required. If that were true, it would mean the government would be dictating every aspect of company policy, which defeats the point of having a market in the first place.
We cannot catch all instances of market sabotage by looking for blatant violations of law. The absence of such violations does not mean sabotage is not going on.
What are some examples of legal ways to harm a business? Suppose business A opens a location competing with business B. Decision-makers in business A have an incentive to short stock in business B before doing this.
Suppose business A is about to open a facility that has negative externalities that discourage certain other local businesses, such as a factory producing a lot of pollution, an airport producing a lot of noise reducing nearby property values, or a liquor store or casino which may increase crime and decrease the appeal of the area. Decision-makers in business A then have an incentive to short stock in the affected local businesses.
Suppose a legislator is considering a bill that would harm business A. The legislator has an incentive to short stock in business A before passing the bill. If the legislator is listening to a lobbyist from an opposing business, the lobbyist and his backers also have an incentive to short stock in A, once they are confident the bill will be passed.
Do you have any data showing that such things actually happened?
I don't have that data, but you are the one making the claim that market sabotage is rare. If you want to substantiate your claim, the burden of proof on you to find data showing these things don't happen. If there's a rational incentive for people to do something, the initial presumption is that at least some of them do it.
For at least one of the cases I mentioned, it's well known that ranking members of Congress use their insider knowledge of what bills will be passed to make millions investing in the stock market, beating the Dow Jones. It would be surprising if shorting stock wasn't one of the tactics they use to do that.
Insider trading is just a different thing from sabotage.
It's sabotage if the person shorting is also causally responsible for harm to the company causing a drop in the company's stock.
A notable series of incidents where businesses were harmed by government action, and apparent insiders profited with highly/leveraged market plays:
- https://www.forbes.com/sites/shaharziv/2025/03/03/crypto-whale-profits-68-million-off-trumps-crypto-reserve-news/
- https://www.tradingview.com/news/cryptonews:4c6d1252f094b:0-early-bitcoin-whale-shorted-1-1b-right-before-tariffs-now-up-27m-how-did-he-know/
- https://www.webopedia.com/crypto/learn/suspicious-crypto-whale-trades/
Or coordinating a highly public boycott driving the stock way down; Target comes to mind.