Wall Street for Dummies

If you thought you knew Wall Street, well, think again. You don't.

Take the so-called revolving door. You might think it is flip-flopping from the public to private sector. It isn't.

Mary Schapiro, the former chairman of the Securities and Exchange Commission, is taking a job at Promontory Financial Group LLC. The company is in the business of advising clients on how to deal with government regulators. And its cast includes multiple former regulators, including two former senior officials at the Office of the Comptroller of the Currency and the former top banking regulator at the Federal Reserve.

You might think: "Hey, that place sounds like a revolving door for Wall Street and regulatory conflicts."

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Is there honor among thieves? A survey that found half of hedge-fund managers think their competitors are cheating, while 30% essentially copped to it.

But you would be wrong, according to Ms. Schapiro. "In my case, there's no revolving door," the 57-year-old Ms. Schapiro said in an interview with The Wall Street Journal.

Why? As Ms. Schapiro put it: "I won't ever be going back to government."

See, even if you use the revolving door, you actually haven't as long as you don't intend to do it again.

Still think you know Wall Street? Now consider the bidding war for Dell Inc.

Before mid-January, there wasn't much interest in the computer and electronics maker. Its stock was plodding along around $11 a share. Then rumors surfaced that the firm would go private.

The news gave the stock a pop. It topped $13 a share.

And then a curious thing happened. Suddenly everyone had to have Dell in some way: Carl Icahn, Southeastern Asset Management, Blackstone Group, and, of course, Michael Dell and Silver Lake Partners.

It was as if Mr. Dell was trying to steal the company for a 14% premium to its market price.

Dell, it turns out after all, shines. It was as if it's suddenly got potential. The new bidders not only loved the company and were willing to pay a premium to the premium, they insisted that the public should retain a stake.

You thought Dell was a no-growth, unremarkable company? Wrong. Dell is the hottest name on Wall Street.

How about the courts? Every case is given the same treatment, right?

Take the two judges working on the mammoth SAC Capital Advisors insider-trading cases.

Judge Victor Marrero, of the U.S. District Court in Manhattan, has raised objections to the proposed $602 million settlement. He is concerned that SAC isn't admitting any wrongdoing. He said a big settlement without an admonition was "counterintuitive and incongruous," he said. "If it truly did nothing wrong."

Down the hall at the same courthouse, Judge Harold Baer didn't have the same concerns at all. He approved another SAC settlement for $14 million. There were no worries about whether or not SAC did "nothing wrong" or not.

And speaking of insider trading, it sounds as if the regulators are really cracking down on sensitive corporate information, right?

Not so fast. Consider the SEC's announcement Tuesday that it would allow companies to disclose information via social-networking sites. "Most social media are perfectly suitable methods for communicating with investors," George Canellos, acting director of the SEC's division of enforcement, explained in a statement.

Among the sites the SEC cited as examples were Facebook and Twitter.

The decision makes perfect sense, of course. Most investors are constantly trolling for major earnings announcements on the same platform where Charlie Sheen and Kim Kardashian are revealing all of their own inside information.

You can easily imagine your digital streams lighting up with messages such as "Dell reports another huge quarter" alongside "Here's my baby bump!" and "#WINNING."

All of this is just a peek into how Wall Street works. Do you think deal talks are well-informed? Just this week, we have companies wrestling with breaking all ties completely or merging into one global provider.

Do you think markets make sense? Investors are being warned of a "bull market" that's up less than 5% since 2007.

Is there honor among thieves? A survey that found half of hedge-fund managers think their competitors are cheating, while 30% essentially copped to it. (Respondents said they witnessed wrongdoing.) And the other 20%? It is unclear what they think. The survey didn't say, and SAC isn't admitting to it.

Ultimately, all of this is why Wall Street continues to confound even the people who have worked in the industry for decades.

Write to David Weidner at david.weidner@dowjones.com