Monday, October 11, 2010

Did You Know??

Well, here's an interesting byte of info:

...insider-trading laws don't apply to Congress.

Nor to Congressional staff, which is doing very well on its stock trades, thankyouverymuch!

HT: Ticker


Grim said...

As a matter of fact, I did know that.

Now, think about how much fun that is. "Well, looks like we've got the votes for that new regulation on milk production. Be a few hours before the vote... better call my broker."

Another group not subject to such laws: judges. So, a Federal judge who is about to issue a ruling that will have a major effect on an industry can call his broker first.

Anonymous said...

So what? Isn't beating the market what everyone tries to do?

Like corporate executives, senators have access to valuable inside information. They are aware of potential changes in the tax laws, government contracts, research funding, and trade negotiations. Any one of these factors may have profound ramifications for the companies or industries involved.

So just because they have the power to earn 'unfair' profits in the stock market does not necessarily mean they use it. Two-thirds of senators do not trade stocks at all and, so far, not a single member has admitted trading stocks based on confidential information he or she obtained on the job.

Historically speaking, convicting an individual of insider trading has always been a difficult task. The vast majority of insider trading goes undetected as evidenced by the fact that corporate insiders continue to earn significant abnormal returns despite the efforts of the SEC to monitor their trading activities. I am doubtful that making insider trading by members of Congress illegal will eliminate the problem; that is, of course, you want more regulations.