June 16, 2015
The Eddie Murphy Rule
What’s your favorite finance movie? Don’t have one? Impossible. Every Gainplanner has a favorite. From “Working Girl” to “The Wolf of Wall Street,” we’ve seen them all. Though our tastes are varied, most of us agree that “Trading Places” is probably the funniest movie about finance ever made. Eddie Murphy and Dan Akroyd probably had something to do with that.
And speaking of Eddie Murphy, have you heard of the “Eddie Murphy Rule?” In the movie, Billy Ray Valentine (Murphy) and Louis Winthorpe (Akroyd) foil the plan of the old guard Duke brothers, who plan to use insider information, a report from the Department of Agriculture on the state of orange crops, to profit from trading frozen concentrate orange juice futures. Our heroes substitute a falsified report, announcing a terrible orange crop for the year. The real report, of course, tells the truth, that the orange crop was strong. Based on the falsified report, the Duke brothers go big, and lose everything. For a more detailed explanation of the last few minutes of “Trading Places,” check out this play-by-play on NPR.
The Dodd-Frank Act, signed into law in 2010, 27 years after “Trading Places” was released, made it illegal to use non-public information from government agencies to trade in futures. What the Dukes did in the movie wasn’t illegal, at least in 1983. But it didn’t work out very well for them anyway, did it?
Changes in the financial industry don’t always happen quickly. Not that the new legislation was necessarily inspired by Ray, Louis, and the Dukes, but thanks to the movie, the loophole was common knowledge. And the playing field wasn’t leveled for another 27 years.
Here at Gainplan, we like to know how the system works in our clients’ favor, and how it doesn’t. Then we do our best to find the best position for them in the current market. By putting our clients’ goals and ambition first, we hope to help them stay ahead of the game.