You can BET ON IT that low level government employees either trade or sell this information or both...
Posted on 03/29/2006 3:00:24 PM PST by fight_truth_decay
Two Democratic lawmakers have prepared legislation that would prohibit members of Congress and their aides from trading stocks based on nonpublic information gathered on Capitol Hill.
Rep. Louise Slaughter, the New York Democrat who wrote the bill, said: “Top leadership aides know what is happening before anyone else. The potential for abuse there is incredible.”
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(Excerpt) Read more at moneycentral.msn.com ...
In an article in the Wall Street Journal, Brody Mullins discusses proposed legislation that would make it illegal for members of Congress and their staff to trade on nonpublic information related to legislative action that affects the price of a stock. The legislation is not yet available, and the article notes that it covers more than just insider trading: "In addition to banning trading on inside information, the proposal would require that lawmakers and their top aides disclose within 30 days any stock trades. Congressional rules now require lawmakers to disclose their trades once a year. The bill also would require that companies register with Congress if they sell information about congressional activity to Wall Street investors."
To some extent, the legislation would expand the commonly used definition of insider trading. According to the SEC, insider trading is the buying or selling of securities on the basis of material, nonpublic information in violation of a duty. But the information in question normally comes from inside a company: For example, an executive of a publicly traded company can’t tell friends to sell company stock if he or she knows that the company is about to fall short of its quarterly earnings forecast.
Lawmakers and staff members never have faced similar obligations on the information they acquire. “If a congressman learns that his committee is about to do something that would affect a company, he can go trade on that because he is not obligated to keep that information confidential,” said Thomas Newkirk, a partner with law firm Jenner & Block and a former official with the SEC’s enforcement division. “He is not breaching a duty of confidentiality to anybody and therefore he would not be liable for insider trading.”
As Peter Lattman on the WSJ's Law Blog (here) notes so well, "If you’re asking yourself, 'Wait a minute, members of Congress are allowed to commit insider trading?' you’re not alone. We asked the same question." Can Capitol Hill's investors really do better than Wall Street's? Bruce Carton on the Securities Litigation Watch blog ( here) points out that a study of securities investing by Senators in the 1990s showed that their picks beat the market by 12%, a strikingly high return. The legislation introduced by Reps. Louise Slaughter and Brian Baird is motivated in part by the trading of a former aide to Rep. Tom DeLay in 1999 and 2000, although it is not clear whether his trading was based on nonpublic information.
While the usual basis for insider trading cases (civil and criminal) is Sec. 10(b) and Rule 10b-5, the Supreme Court's interpretation of those provisions requires that there be a duty to maintain the confidentiality of the information. That duty appears to be lacking for our elected officials and their staff, unlike corporate executives, employees, lawyers, accountants, journalists (particularly from the Wall Street Journal), printers, consultants, and many, many others.
A recent study by Alan J. Ziobrowski of Georgia State University and colleagues at three other schools was reported in Sunday's Philadelphia Inquirer reports Securities Litigation Watch The authors of the study conclude that these results "suggest that senators are trading stock based on information that is unavailable to the public, thereby using their unique position to increase their personal wealth...." The study adds that it is as if "senators knew appropriate times to both buy and sell their common stock." The article quotes Ziobrowski as stating in a recent interview that "there is cheating going on, at a 99 percent level of confidence."
Repaired Link -- Securities Litigation Watch :
http://slw.issproxy.com/securities_litigation_blo/2006/03/bill_may_prohib.html
You mean that is not already illegal????
Only for us, not for the elitist politicians.
Un fricken beliveable.
http://www.businessweek.com/magazine/content/05_52/b3965061.htm
Washington Whispers to Wall Street
On Tuesday, Nov. 15, they couldn't figure out why there was so much action in USG Corp. (USG ), a Chicago building-materials company whose subsidiary is mired in asbestos lawsuits. The stock was trading at double the normal daily volume and would gain $2.12 to close at $61.55. But there wasn't any major news to power the run-up.
Public news, that is. Behind the scenes, Senate Majority Leader Bill Frist (R-Tenn.) had decided to override the qualms of Budget Committee leaders and press ahead with a bill to create a $140 billion fund to relieve companies such as USG of their asbestos liabilities. Frist wouldn't announce his move until Nov. 16. But the news got to key Wall Street players a day early via a little-known pipeline: a small group of firms specializing in "political intelligence" that mine the capital for information and translate Washington wonkspeak into trading tips.
To some extent, the legislation would expand the commonly used definition of insider trading. According to the SEC, insider trading is the buying or selling of securities on the basis of material, nonpublic information in violation of a duty. But the information in question normally comes from inside a company: For example, an executive of a publicly traded company can’t tell friends to sell company stock if he or she knows that the company is about to fall short of its quarterly earnings forecast.
Lawmakers and staff members never have faced similar obligations on the information they acquire. “If a congressman learns that his committee is about to do something that would affect a company, he can go trade on that because he is not obligated to keep that information confidential,” said Thomas Newkirk, a partner with law firm Jenner & Block and a former official with the SEC’s enforcement division. “He is not breaching a duty of confidentiality to anybody and therefore he would not be liable for insider trading.”
It is NOT illegal because it did not come from within the company. The trades were made based on outside influences, new laws regs etc.
I repeat it is NOT illegal, although it should be for them.
LOOSE STANDARDS - comment made by:
Nickname: old timer
Review: Only politicians could interpret these practices as anything but insider information, i.e., not disseminated to the general public. As a professional investor of some 50 years, anything akin to this practice in the private sector would give you a lifelong ticket out of the business.
Date reviewed: Dec 21, 2005 5:02 PM businessweek.com
Of course but the rules do not apply to politicians. Look at their retirement system, health insurance, and now trading rules.
They are better than the American people and deserve more. (sarc)
Even though it is not public information that if being traded on.
I think I read that on Fox earlier (Cavuto).
It just about makes me ill. I take that back, it does make me ill.
Not only do they take our money and waste it, they get enrich themselves with insider info.
This is just un-freeking-believeable.
You can BET ON IT that low level government employees either trade or sell this information or both...
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