Does Congress trade on inside information?
Filed under: Economy
Did you know that it's perfectly legal for members of Congress to trade on information they gather about companies in the course of their work? Not only is this legal, but research suggests that the average member of Congress earns 25 percent higher returns on their investments compared to the average investor. You can't really expect Congress to enforce laws against insider trading if Congress is not bound by the same laws.
This is why it comes as a surprise to me that someone in Congress is actually trying to make insider trading by Congress illegal. Louise Slaughter (D-NY) and Brian Baird (D-WA) have introduced legislation that would prohibit lawmakers and their staffs from trading stocks or engaging in other financial transactions based on information they learn in their jobs that is not also available to the public.
Under the proposal, lawmakers and their staff would have to disclose any stock, bond or commodity trades exceeding $1,000 within 90 days. They also would not be able to pass confidential information to outsiders.
After everything we have been through in the last couple of years, I have almost lost my ability to be shocked by anything. But with the U.S. gaining control of so many huge corporations, the potential for Congress to be an insider trading paradise looks unlimited unless this legislation passes. Who thinks it will become law?
Peter Cohan is president of Peter S. Cohan & Associates. He also teaches management at Babson College. His eighth book is You Can't Order Change: Lessons from Jim McNerney's Turnaround at Boeing.
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Reader Comments (Page 1 of 4)
7-14-2009 @ 6:02PM
Lou said...
This shouldn't surprise anyone, congress has been passing laws that everyone has to obey except them for years.
They're all crooks, Dems, Republican, Independents, it doesn't matter. They only care about themselves.
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7-14-2009 @ 11:51PM
t scott said...
isnt it disscrimanation for the to be able to use inside informatiom and we cant,
7-15-2009 @ 10:32AM
clarko said...
People need to stop crying and actually do something. When polls are taken the legislative branch gets less than 30% approval rating overall but when asked about their individual representative, the rating goes up significantly. When is everyone going to learn? Voting them ALL out of office only works if everyone votes their person out! It doesn't do any good to talk about it and then go to the polls and put your guy back in office while complaining about what crooks the rest of them are. There are less than 600 total members of the legislative and executive branch of our government. All of the problems this country have can be traced directly back to actions taken by these individuals. A country of over 300 million lets less than 600 elite individuals control our lives. WAKE UP SHEEP!
7-14-2009 @ 6:04PM
carl said...
Another huge reason for term limits for all politicians!!!
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7-15-2009 @ 4:54PM
Susan said...
Absolutely - term limits and live by the same laws we have to live by. Check out this utube "We the People" and get your teabags ready to mail! I'm mad as hell and I don't want to take it any longer!!!!
7-14-2009 @ 6:09PM
paul said...
A serious YES for term limits.
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7-14-2009 @ 6:12PM
lak said...
this is how these guys with little net worth when going to dc end up being millionaires when the finally leave.
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7-14-2009 @ 6:20PM
Bill said...
It isn't just Congress. In all walks of life, people seem to want "laws" to stop something or protect, but NOT apply to them. ie: Everyone wants speed limits to stop "those idiots" from speeding, but everyone speeds. Corporate executives tell their employees costs must be cut, but then take multi million dollar bonuses. Religious leaders preach morality, only to live marginally moral lives as if it doesn't apply to them. Human's are a race of contradiction.
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7-14-2009 @ 6:39PM
GLENN said...
you'll have to excuse me,,but this doesn't surprise me,,,what does surprise me is the fact that the american people keep voting the same politicians back in office,,vote them out, what do we got to lose...
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7-14-2009 @ 6:43PM
gd said...
A new low for the sleaziest of scum, the politician. ALL of them, I mean each and every single one of them just need to be burned alive. Anyone wishing to run for a second term for any office MUST be automatically guilty of malfeasance or worse. Burn them all or impale them all for they are ALL lying, cheating, theiving scum.
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7-14-2009 @ 6:42PM
FOXYLYNX said...
CONGRESS PASSES RULES AND REGS AND LAWS THAT THEY PROFIT FROM - WHEN ARE WE, THE PEOPLE, GOING TO HAVE A SAY IN WHAT THEY CAN PASS AND CAN NOT PASS. THEY ARE THE VULTURES THAT ARE EATING US ALIVE! HOW MANY TIMES DO I HAVE TO SAY THIS - "TERM LIMITS" AND AGE LIMITS TOO AND THAT INCLUDES THE SUPREME COURT!
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7-14-2009 @ 6:51PM
Handicapper said...
You put $ in the stock market and call it investing. I go to the track and you call it gambling. In both examples, there are guaranteed winners and losers. The stock market has always seemed to be the country club of finance. And yes, inside information is available at the track too.
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7-14-2009 @ 7:06PM
Chuck said...
Term Limits will NEVER happen. The taxpayer gravy train is just too good.
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7-14-2009 @ 7:15PM
dave said...
Not just term limits, but make it a heinous crime to violate the public trust. We must have more accountablility from our government on all levels, and we must hold our elected officials to high standards, or we are doomed to mediocrity.
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7-14-2009 @ 7:19PM
rip300rog said...
not surprising but definately should be illegal. These are the same people who don't have to pay SS tax because they have a better gold plated plan. If we made all the politicos and govt. employees pay SS like the rest of us do then we would not have a crisis in funding like we do today. I am saddened every day to see how much the ruling class is setting them selves apart from the people. Our politicians have made a joke out of represenative govt. They are all only in it for themselves, not just the money but it would seem they are in it for the sexcapades as well.
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7-14-2009 @ 7:31PM
David said...
The Elitist think they are so much better than the average citizen. I did not know about this. I am aware that they have better health care and retirement that the commoners.
Americans need to demand government for the people!
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7-14-2009 @ 7:35PM
Stan said...
"Of the People, By the People and For the People" The problem is the congress does not consider themselves "Of the People" Thet are better than the "People" therefore the laws "For the People" do not apply to them. Congress makes laws since the are "By the People" but they do not apply "To All People" Setting term limits may help but even with term limits during the period that a congress person "Are the People" they will continue to screw the "Real People". There should be laws passed that makes Congress "Among the People" meaning all laws apply to "ALL the People" both those that make the laws and those that elected those that make the laws.
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7-15-2009 @ 1:46PM
Frank said...
I agree with the spirit of your post, but I'd say that they consider themselves and those at their level of society (corporate execs & old wealth elitists) to be "the People", and the rest of us are sub-human, to be manipulated like rats in a maze or a Pavlovian dog. It's working pretty well for them. If you take a look at most of them, you'll find 2nd or 3rd generationpolitical experience in their family. There is a kind of perverse paradox in play, since it is against human nature to turn down an opportunity to become fabulously wealthy and experience only the best in life. Their current problemis everyone is learning about their activity in the info era, and with the middle class shrinking, the gap between those at the top and the bottom is becoming a impassable chasm, unless you go into politics or televangelism.
7-14-2009 @ 7:40PM
skids said...
lets see... they are all "owned" by corperations anyway, thats how they were "allowed" to vote themselves the best healthcare, retirement, and "perks" package in america. i do believe we should force congress to apply the same rules to themselves that we have to play by. let them pay for thier own insurance, collect social security and not lifetime 100% pensions, and have to put each raise on a national ballot.
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7-14-2009 @ 8:18PM
jessie said...
now you know why congress refuses to do anything about speculators
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