Did someone have advance knowledge of what President Barack Obama would say in his State of the Union speech to get an inside edge on the shares of a penny stock? Photographer: Andrew Harrer/Bloomberg
Did someone have advance knowledge of what President Barack Obama would say in his State of the Union speech to get an inside edge on the shares of a penny stock? Photographer: Andrew Harrer/Bloomberg

A hot topic that kept popping up last year was whether well-connected people in Washington were using unpublicized government information to make money for themselves or their clients in the stock market. The consensus that finally emerged after much scandal-mongering was that this sort of thing goes on all the time, and usually there's nothing illegal about it.

Nor should there be: If anything, we need more openness from the federal government, not more secrecy and hysteria in the name of cracking down on securities researchers and the political-intelligence industry.

The subject has surfaced again, this time because of a wacky penny stock (actually, a sub-penny stock) that got a big percentage bounce because of a proposal in Barack Obama's State of the Union address. In his speech, the president floated an idea for a new retirement program called a MyRA, a play on "my IRA.'' There just happens to be a stock that trades over the counter with the ticker symbol MYRA. The company it's associated with, Myriad Entertainment & Resorts Inc., was delisted years ago after it stopped making filings with securities regulators. (Myriad once had plans to build a casino resort in Tunica, Mississippi. But the project never happened, and the company has nothing to do with retirement plans of any sort.)

So naturally a bunch of dingbats bought MYRA stock after the president's speech, either because they are easily confused people or because they believe in the greater-fool theory and figured there are bigger dingbats out there who would pay more for the stock than they did. Since Obama's speech, MYRA has risen to 1/10th of a cent ($0.001) from 1/100th of a cent ($0.0001), which is a 900 percent gain -- enough to ensure that the story would get picked up by multiple financial bloggers.

The wonderful part about this story is that almost 1 million MYRA shares were traded on Jan. 17, more than a week before the State of the Union address. Coincidence? Maybe not. But let's assume the absolute worst for argument's sake: That somebody who knew in advance what the speech would say was smart enough to figure out that greater-fool theorists would drive up the price of MYRA after the president's speech to Congress -- and bought 983,069 shares on Jan. 17 in hopes of profiting.

At 1/100th of a penny a share, that would be about $98. But as a blog post at thelongshorttrader pointed out, that day's trading volume was the most in the company's entire history. So it's still fun to talk about.

Is this sleazy? Perhaps, if someone in Obama's inner circle was involved. Is it insider trading? I can't imagine that it is. How could it be? There was no information about the company or the stock in the president's speech. If information isn't real, it can't be confidential, making misappropriation impossible. So there would have been no duty to refrain from speculating that a bunch of dummies would try a dumb thing just because the president mentioned a new government program that had the same name as an insignificant penny stock's ticker symbol. Those people deserve to be parted from their lunch money.

That doesn't mean I don't want to know who pulled off this caper. I do. Such a person might have a bright future one day -- as a member of the Securities and Exchange Commission.

(Jonathan Weil is a Bloomberg View columnist. Follow him on Twitter.)

To contact the writer of this article: Jonathan Weil at jweil6@bloomberg.net.

To contact the editor responsible for this article: James Greiff at jgreiff@bloomberg.net.