Many people are aware that it’s illegal for business executives to engage in “insider trading,” the practice of buying and selling stocks based upon information not available to the general public. Incredibly, however, those laws do not apply to members of Congress or to their staffs.
The Wall Street Journal has a great story today on how congressional staffers openly engage in stock transactions directly related to their day jobs and how basically no one in Congress is interested in fixing this situation:
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. […]
The aides identified by the Journal say they didn’t profit by making trades based on any information gathered in the halls of Congress. Even if they had done so, it would be legal, because insider-trading laws don’t apply to Congress.
A few lawmakers proposed a bill that would prevent members and employees of Congress from trading securities based on nonpublic information they obtain. The legislation has languished since 2006.
“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.”
When the bill was introduced nearly five years ago, just 14 other lawmakers endorsed it. The current version of the bill has fared worse: Only nine lawmakers support it. There is no companion legislation in the Senate.
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.