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Legal Secretary Who Amassed $9 Million Fortune Has Something in Common With Buffett, Bezos

The vagaries of insider trading laws, as explained by a feel-good story of a secretary who amassed a fortune by copying her bosses.

Sylvia Bloom worked for 67 years as a secretary at the law firm Cleary Gottlieb Steen & Hamilton, and accumulated a personal fortune of more than $9 million.

Bloom did this by being "frugal" and "by shrewdly observing the investments made by the lawyers she served," reports The New York Times, which broke the story Monday on its front page.

The story resonates in part because it reinforces a hopeful narrative, which is that wealth is a reward for virtues such as frugality, shrewdness, and patient savings. It helps, too, that the childless Bloom also left the bulk of her estate to charity—another virtue.

But the mechanics of the wealth accumulation, at least as the Times describes it, raise some other questions that are left unexplored by that newspaper's initial report.

The Times quotes Bloom's niece, Jane Lockshin, the executor of Bloom's estate and the treasurer of the charity receiving $6.24 million from it, as explaining "She was a secretary in an era when they ran their boss's lives, including their personal investments…So when the boss would buy a stock, she would make the purchase for him, and then buy the same stock for herself, but in a smaller amount because she was on a secretary's salary."

Perhaps inside every Cleary Gottlieb lawyer is a brilliant portfolio manager struggling to get out. Or perhaps Bloom's returns were about what someone would get simply by investing in a stock index fund over this time period, given the power of compounding over a period of time as long as 67 years. The span coincided with the long post-World War II bull run of the U.S. stock market.

But there's another possible explanation of Bloom's fortune that is less favorable. That is the possibility that she used her privileged access to confidential information to make money.

Other people—even at least one other person who worked at Cleary Gottlieb—have gotten in big trouble for this. A Bloomberg News article published by The New York Times back in 1998, for example, reported, "A former associate at the New York law firm of Cleary, Gottlieb, Steen & Hamilton pleaded guilty yesterday to insider trading for misusing confidential information about one of the firm's clients."

In that case, a Cleary lawyer bought options betting on the price of a company after being assigned by the law firm to help draft documents related to a takeover bid. Maybe that person, who got caught, is the only Cleary lawyer who ever traded based on inside knowledge.

I'm not a big believer in the expansive interpretations of securities law that create these insider trading cases. But in 2016, the same year Bloom died, the Supreme Court ruled unanimously in Salman v. United States that the Securities Exchange Act of 1934 and a subsequent Securities and Exchange Commission rule "prohibit undisclosed trading on inside corporate information by individuals who are under a duty of trust and confidence that prohibits them from secretly using such information for their personal advantage."

It's not clear whether Bloom's bosses at Cleary knew what she had been doing, let alone whether Cleary's clients knew. But no matter what one's view of insider trading law, you don't have to think about it for too long to realize that stock trading by individual confidential secretaries at large corporate law firms poses potential legal and moral complexities. I'd prefer these be handled by agreement among the law firm, its clients, and its employees, rather than by criminal or civil government enforcement actions.

It's complicated stuff, involving, potentially, not only impending mergers and acquisitions but also even ongoing litigation. Imagine a lawyer representing a tobacco company in a liability case who knows that unfavorable documents found in pre-trial discovery will soon emerge in a public court filing, or in an investigative news article. Imagine the lawyer selling, or short-selling, the tobacco company stock based on that information. Imagine the lawyer's secretary doing the same for her own account.

As a legal secretary who lived in a rent-controlled apartment in Brooklyn, Bloom may seem not to fit the stereotypes of rich people. Actually, though, she's precisely representative of the paradox of America's attitude toward wealth. We admire the virtues that create it and simultaneously suspect that there may be another side to the story. Warren Buffett is a brilliant investor and he's also getting rich from selling stuff (Dairy Queen, Coke, fake Wells Fargo accounts) that may not be too good for you. Mark Zuckerberg created an amazing product as a college student and also isn't that careful about your privacy. The Walmart Waltons and Jeff Bezos of Amazon created amazing value for customers and also hurt some local retailers.

Cheer Sylvia Bloom's accomplishment, sure. But you may also want to double check with your secretary—or with your lawyer's secretary—that you all have the same understanding about whether your confidential information is going to be used for private profit, even if those profits eventually go to charity.

Ira Stoll is editor of FutureOfCapitalism.com and author of JFK, Conservative.

Photo Credit: LEONHARD FOEGER/REUTERS/Newscom

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  • ||

    Worked for 67 years? How old was she when she retired?! 80+ year old secretary?

  • Mr. Gus||

    Hey, man, at a certain point they turn into gum jobs, and gum jobs are the best jobs.

  • DenverJ||

    If she was 80 then that means she started at 13. Old enough to bleed, old enough to BCC?

  • Flaco||

    The NYT story says she retired at 96, just before she died.

  • BYODB||

    $9 million is a lot of money to make off investing by essentially using your boss as a cheat sheet though. 'frugal living' ain't going to save you that much, but we also have no clue what her salary was either I suppose.


    It's obviously insider information though, if she wasn't dead she would be prosecuted for it. Honestly, I'm shocked the IRS hasn't come after her estate.

  • Christophe||

    If her bosses were insider trading, and she copied their purchases without knowing what they were doing and why, she effectively had no insider information (about the companies being bought and sold). Moreover unless all/most purchases by her bosses were insider trading, she wouldn't know in advance whether the order she was copying was based on insider information or not.

    I don't know if she'd win in court, but this is unexplored territory as far as I know.

  • Gilbert Martin||

    "If her bosses were insider trading, and she copied their purchases without knowing what they were doing and why, she effectively had no insider information (about the companies being bought and sold)"

    Exactly, what she was doing was not "insider trading" as she had no direct knowledge of specific information about any of the companies bought or sold.

  • Ben of Houston||

    BYODB, not necessarily. The rule of thumb is that a decent stock investment doubles every 7 years. At 67 years, that would be exponentially 2^10, or 1000 times.

    So if she had a decent nest egg (maybe an inheritance) of a few thousand in 1950 and contributed to it reasonably and had decent luck in investing, that's not exactly a mindblowing result. Compound interest can do some absurd results if you are good enough or lucky enough to avoid pitfalls.

  • Mark22||

    $9 million is a lot of money to make off investing by essentially using your boss as a cheat sheet though.

    It's just $500/month (in today's dollars) for 67 years at 7%, something she could have easily done.

  • ||

    Ira, if I devised a new way to heat my factory, did I not use inside information to do so? If my secretary and friends invest in my company, driving the price up, doesn't that help me?

  • JWatts||

    There's nothing specific to what you said that would classify it as insider trading.

  • JWatts||

    "Legal Secretary Who Amassed $9 Million Fortune .... As a legal secretary who lived in a rent-controlled apartment in Brooklyn"

    Yes, color me shocked.

  • buybuydandavis||

    Insider trading by proxy
    Should do the same thing with the family of pols and regulators

  • Ariki||

    So for a woman to be wealthy she must copy what a man does?
    #patriarchy

  • Don't look at me.||

    Did her boss have like 90 million then? No? Huh.
    Another " you didn't build that".

  • beteille||

    She kind of proves the point about rent control, too. Here's someone who can afford WAY more than her rent-controlled apartment, yet she stays put, keeping out lower-income renters.Trickle down, indeed.

  • gormadoc||

    How dare she invest that money and help grow the economy for everyone?! And by saving that money and her investments end up leaving a fortune to charity?! Disgusting.

  • loveconstitution1789||

    She did live in a rent-controlled apartment which allowed her to pocket more money at the landlord's expense.

  • jjjjj||

    Wasn't there a case recently where a guy was fined way more money than he made off of insider trading because the stock broker who handled his trades knew he got inside information and directed his other clients to also make purchases? As I recall the fine was overturned due to the fact that he had no idea his broker was giving this information out.

    So if the secretary's boss was trading based on insider information then the secretary should not be considered to be performing insider trading unless she knew the boss had inside information, but the boss also could not be responsible for her profits.

  • The Last American Hero||

    There are a lot of facts missing from the article, but what if it was "My boss is rich, hangs around with Wall Street dudes, and has a pricey financial advisor. He always brags about the advice the guy was giving him, so I took it."

  • Mark22||

    Or perhaps Bloom's returns were about what someone would get simply by investing in a stock index fund over this time period, given the power of compounding over a period of time as long as 67 years ... But there's another possible explanation of Bloom's fortune that is less favorable.

    Why not ust do the math? It takes about $500/month at 7% annual interest to reach about $9 million at 67 years. So, no nefarious explanation needed, a simple stock index fund would do.

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