revelarts
06-03-2011, 08:25 AM
Kyle Smith
Insider Trading Rules That Don’t Apply To Congress
Jun. 1 2011
You want strict ethics rules? Start at the top — with the shining example of the noble knights of the House of Representatives, which bans all gifts from lobbyists and imposes a $50 limit on gifts from anyone else. And no, you can’t give an infinite number of $49 gifts to Larry Lawmaker. Sayeth the holy rulebook.
The general provision goes on to state that a member, officer or employee may accept from any other source virtually any gift valued below $50, with a limitation of less than $100 in gifts from any single source in a calendar year. Gifts having a value of less than $10 do not count toward the annual limit....
Except that one thing you can do as a member is study pending legislation and regulatory changes, call up your broker and instruct him to trade on that nonpublic information. Do this as often as you want; you will suffer no penalty. There is no limit to how much money you can earn on insider trading in the House or Senate. Lawmakers and their staffers are specifically exempted.
As you might expect, those who work in the hallowed halls are not shy about availing themselves of the opportunity. A Wall Street Journal analysis published more than six months ago that has thus far provoked no particular sense of shame on Capitol Hill found that at least 72 Congressional aides in both parties had recently traded shares of companies that their bosses helped regulate. In 2009, while Senate Banking Committee member Mike Crapo, a Republican from Idaho, was involved in discussing “stress tests” on banks such as Bank of America, his aide Karen Brown traded the company’s stock on several occasions in the weeks before May 7, 2009 — when BofA surged thanks to a press release on its stress-test result, assuring Ms. Brown a nifty profit.
Asked by the Wall Street Journal to explain, Sen. Crapo’s office said the trades weren’t really made by Karen Brown but by her husband, who had no knowledge of what was going on in the banking committee. Would you go to your compliance officer, much less the SEC, with that line? True, these folks do need a good laugh now and again, and the SEC has to be in a jolly mood after the jury in the Galleon case all but repeated the verdict from The Producers: “We find the defendants incredibly guilty.”
Last week a study of some 16,000 stock transactions carried out by House members was published in the journal Business and Politics. This detailed analysis showed that the investment portfolios of House members beat the market by about six points a year. (Democrats did especially well, outperforming by some nine points a year, while Republicans topped the average investor by only two percent annually.) Senators apparently do even better: “their portfolios show some of the highest excess returns ever recorded over a long period of time, significantly outperforming even hedge fund managers,” noted the journal, citing a previously published study.
http://blogs.forbes.com/kylesmith/2011/06/01/insider-trading-rules-that-dont-apply-to-congress/
http://online.wsj.com/article/SB10001424052748703431604575522434188603198.html
Forgetaboutit...
Insider Trading Rules That Don’t Apply To Congress
Jun. 1 2011
You want strict ethics rules? Start at the top — with the shining example of the noble knights of the House of Representatives, which bans all gifts from lobbyists and imposes a $50 limit on gifts from anyone else. And no, you can’t give an infinite number of $49 gifts to Larry Lawmaker. Sayeth the holy rulebook.
The general provision goes on to state that a member, officer or employee may accept from any other source virtually any gift valued below $50, with a limitation of less than $100 in gifts from any single source in a calendar year. Gifts having a value of less than $10 do not count toward the annual limit....
Except that one thing you can do as a member is study pending legislation and regulatory changes, call up your broker and instruct him to trade on that nonpublic information. Do this as often as you want; you will suffer no penalty. There is no limit to how much money you can earn on insider trading in the House or Senate. Lawmakers and their staffers are specifically exempted.
As you might expect, those who work in the hallowed halls are not shy about availing themselves of the opportunity. A Wall Street Journal analysis published more than six months ago that has thus far provoked no particular sense of shame on Capitol Hill found that at least 72 Congressional aides in both parties had recently traded shares of companies that their bosses helped regulate. In 2009, while Senate Banking Committee member Mike Crapo, a Republican from Idaho, was involved in discussing “stress tests” on banks such as Bank of America, his aide Karen Brown traded the company’s stock on several occasions in the weeks before May 7, 2009 — when BofA surged thanks to a press release on its stress-test result, assuring Ms. Brown a nifty profit.
Asked by the Wall Street Journal to explain, Sen. Crapo’s office said the trades weren’t really made by Karen Brown but by her husband, who had no knowledge of what was going on in the banking committee. Would you go to your compliance officer, much less the SEC, with that line? True, these folks do need a good laugh now and again, and the SEC has to be in a jolly mood after the jury in the Galleon case all but repeated the verdict from The Producers: “We find the defendants incredibly guilty.”
Last week a study of some 16,000 stock transactions carried out by House members was published in the journal Business and Politics. This detailed analysis showed that the investment portfolios of House members beat the market by about six points a year. (Democrats did especially well, outperforming by some nine points a year, while Republicans topped the average investor by only two percent annually.) Senators apparently do even better: “their portfolios show some of the highest excess returns ever recorded over a long period of time, significantly outperforming even hedge fund managers,” noted the journal, citing a previously published study.
http://blogs.forbes.com/kylesmith/2011/06/01/insider-trading-rules-that-dont-apply-to-congress/
http://online.wsj.com/article/SB10001424052748703431604575522434188603198.html
Forgetaboutit...