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Congress is bound by the same rules as the general public, they just aren't legally insiders. Insider trading requires not only material, non-public but also s
by TheCoelacanth 6y ago
Congress is bound by the same rules as the general public, they just aren't legally insiders.
Insider trading requires not only material, non-public but also some kind of duty of confidentiality to the company you are trading.
Congress doesn't have that type of relationship, so they are not insiders. Their spouses aren't either.
There are some additional rules that apply to people who gain knowledge in an official capacity[1], but these were enacted fairly recently and haven't been effective at keeping Congress from trading using the non-public information that they receive.
[1] https://en.wikipedia.org/wiki/STOCK_Act https://en.wikipedia.org/wiki/STOCK_Act
- tomcam 6y agoWell they aren't legally insiders because... they made the rules.
- TheCoelacanth 6y agoNot really, they aren't insiders because when courts interpreted the rather vague laws against fraud in the context of securities trading, they didn't interpret Congress trading based on knowledge received in their job as fraud.
- jonhohle 6y agoThis falls under misappropriation which does not require the reader to any relationship to the company being traded, only material, non-public information.
- TheCoelacanth 6y agoI'm not aware of any case law finding that Congress using their knowledge is misappropriation. Do you have any examples to the contrary?