Stock tips and public policy are a dangerous mix.
Whether or not U.S. Representative Chris Collins engaged in insider trading, as federal prosecutors allege, his indictment this week exposes what a poor job Congress has done to guard against such transgressions. Collins, a New York Republican, is accused of sharing insider information about the value of a publicly traded Australian biotech company. Read more: https://www.bloomberg.com/opinion/articles/2018-08-10/congress-s-guide-to-insider-trading-and-corruption
Why Congressional Insider Trading Is Legal – and Potentially Profitable
As our Income Expert Marc Lichtenfeld wrote a few years ago…
I know a nearly foolproof way of getting rich. It doesn’t involve signing up for one of The Oxford Club’s services, and it doesn’t require much risk because you already know the outcome. In fact, you’ll help decide it. One thing you can do to increase your net worth by 10-fold is get elected to Congress.
It’s easy to understand how our representatives and senators obtain valuable financial information. Congress makes decisions about economic policy, foreign relations, tax reform and other matters that directly affect the bottom lines of publicly traded companies.
But there are more interesting questions to be asked about this seedy phenomenon. How does Congress get away with insider trading? And how can you take advantage of this lucrative legal gray area?
Why Isn’t Congressional Insider Trading Illegal?
President Obama signed the Stop Trading on Congressional Knowledge (STOCK) Act.
This law sought to crack down on white-collar crime in Washington. Among other provisions, it instituted strict disclosure requirements for congressmen who were buying and selling securities.
At first, the law worked like a charm. The number of stock transactions made by congressmen plunged more than 50% from 2011 to 2012. Those who kept trading had to post their trades to a searchable online database.
But then, just a year after the STOCK Act was passed, Congress amended it in a quick procedural vote. Surprise, surprise – it got rid of the online disclosure requirement.
Today, in order to see the inner workings of your representative’s portfolio, you have to go down to the basement of the Cannon House Office Building in Washington, D.C., and ask for a printed file.
Technically, that file in a damp D.C. basement still constitutes a public disclosure. Thus, your congressman’s market-beating transactions are technically not insider trading.
Unless you live near the Cannon House building, there’s no easy way to access congressional insider trading data. But anyone with an internet connection can find the next best thing.
How to Trade Like a Congressman
Unlike our elected representatives, corporate insiders do have to disclose their trades online. If an executive wants to buy or sell stock in their own company, they have to file a Form 4 with the SEC. Then you can find that form in a searchable database on this website.
Washington weaseled its way out of this simple disclosure requirement. But the private sector still has to abide by it.
Dianne Feinstein, Kamala Harris, Jerry Brown, Barbara Boxer, Nancy Pelosi, Jackie Spier, Harry Reid and others bank hundreds of millions of stock marker bucks while sabotaging their competitors...all from their public offices!
The next national election is now less than a year away and congressmen and senators are expending much of their time and their energy raising the millions of dollars in campaign funds they'll need just to hold onto a job that pays $174,000 a year.
Insider trading is the trading of a public company's stock or other securities (such as bonds or stock options) based on material nonpublic information about the company. In various countries, some kinds of trading based on insider information is illegal.
Dec 6, 2019Congress hopes to address a long-standing issue in prosecuting white-collar crime: actually defining "insider trading." On Thursday, the U.S. House of Representatives passed a bill proposing a ...
Oct 19, 2017The legislation applied the law against insider trading for the first time to Congress itself and mandated an online disclosure system of members' stock trades so that compliance to the law could ...
H.R. 2534. To amend the Securities Exchange Act of 1934 to prohibit certain securities trading and related communications by those who possess material, nonpublic information. In GovTrack.us, a database of bills in the U.S. Congress.
Jan 2, 2019When Rep. Chris Collins was charged in August with insider trading, it sparked a push to bar House members from serving on the boards of publicly traded companies. A ban could come shortly, thanks to a rules package proposed by House Democrats as they prepare to take control of the chamber on Thursday.
Insider Trading has never had an official statuary definition, causing prosecutors a lot of headaches as they attempt to argue cases based on court precedent instead of on a set of established ...
Jun 1, 2011There 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 ...
Sep 30, 2019Republican congressman accused of insider trading is resigning Republican Rep. Chris Collins of New York, accused of insider trading, has resigned, a spokesman for House Speaker Nancy Pelosi ...
Shown Here: Introduced in House (03/25/2015) Insider Trading Prohibition Act. This bill amends the Securities Exchange Act of 1934 to prohibit any person from trading securities or effectuating such trades while in possession of related material, nonpublic information, or while either knowing or recklessly disregarding that the information has been obtained wrongfully, or that the transactions ...
Jun 28, 2018Three top Democrats asked the chairman of the Securities and Exchange Commission to open an insider trading investigation into Secretary of Commerce Wilbur Ross in a letter sent Wednesday, nine ...
Tell Congress their duty is to the American people, not their wallets - end insider trading now. Nancy Pelosi & IPOs as Legal Bribery Trading stock based on insider information isn't the only way our elected officials have made it big in the stock market.
Nov 28, 2011AP Throw Them All Out, Peter Schweizer's explosive new expose, has pulled back the lid on congressional insider trading, revealing the shocking regularity with which elected officials use their ...
Congress insiders: Above the law? The same insider trading that can land a regular citizen in jail is perfectly legal for members of Congress - Watch "60 Minutes" on Sunday, Nov. 13 at 7 p.m. ET/PT
Jul 17, 2018The Stock Act did pass in the Senate on Feb. 2, 2012 and it finally passed in the House with an amendment on Feb. 9, 2012. The Senate Ethics Committee and presumably the House posted letters as required explaining insider trading in December 2012.