Monday, November 14, 2011

It's Not Just Members of Congress Who Benefit from Insider Trading, Congressional Staff Also Gain

Wall Street Journal (October 11, 2010) -- "At least 72 aides on both sides of the aisle traded shares of companies that their bosses help oversee, according to a Wall Street Journal analysis of more than 3,000 disclosure forms covering trading activity by Capitol Hill staffers for 2008 and 2009. 

"Congressional staff are often privy to inside information, and an unscrupulous person could profit off that knowledge," says Vincent Morris, a spokesman for Rep. Louise Slaughter (D., N.Y.), a leading backer of the "Stop Trading on Congressional Knowledge Act," or STOCK Act. "The public should be outraged there is no law specifically banning this."

Congressional aides have ringside seats on the making of laws that affect American business. Receiving salaries up to roughly $170,000 a year, they can glean information about policies and government action before the public. They have access to information about hearings or legislation that can move stocks and markets." 

HT: Cyril Morong


At 11/14/2011 1:27 PM, Blogger Paul said...

I wonder if it's illegal for a Congressman to pass on valuable info to, say, a major campaign donor?

At 11/14/2011 1:48 PM, Blogger Benjamin Cole said...

Easy to solve--require Congressional staffer and reps reveal in real time their investments. The private-sector will create a fund to mimic the investments.

At 11/14/2011 1:49 PM, Blogger Benjamin Cole said...

Scratch that--require staffers and reps to reveal their investments in publicly held companies 24 hours before investing. The private-sector will create a fund to copy.

At 11/14/2011 3:29 PM, Blogger Methinks said...

I wonder if now that it's getting more press, something will be done about it.

I'd happily decriminalize trading on material non-public information.

At 11/14/2011 7:14 PM, Blogger PeakTrader said...

Methinks says: "I'd happily decriminalize trading on material non-public information."

So, if you traded, you'd either happily cheat or lose.

At 11/14/2011 9:06 PM, Blogger Methinks said...

No, Peak, I am a trader. And as a trader, I see insiders all the time (hint: they are usually smart enough to hide in the options market, but there's plenty of them).

As a trader, I'd prefer to not overpay for an asset or sell it too cheaply because I have stale information. I'd rather pay an insider to reveal his hand. It's cheaper.

It's really the paying an insider for information that pisses people off. Ridiculous, but true.

Why? Are you under the impression that that making it illegal to reveal things like fraud benefit you somehow?

At 11/15/2011 2:15 AM, Blogger Ron H. said...

Paul: "I wonder if it's illegal for a Congressman to pass on valuable info to, say, a major campaign donor?"

Gee, who would know?

At 11/15/2011 3:45 AM, Blogger PeakTrader said...

Methinks, the stock market is a zero-sum game.

If the stock market rises 10% in a year, and all the insider traders make over 100%, then everyone else, i.e. all the outsiders, must make less than 10%.

At 11/15/2011 8:59 AM, Blogger Methinks said...

Peak, aren't you ashamed of spouting so much idiotic drivel? Please, stop embarrassing yourself.


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