25 ms·

Many believe it's time to do away with lawmakers making stock trades

557 points by DocFeind 5y ago

ravedave5 5y ago
There are so many loop holes. I mean then they just make a company that does stock trades for them and tell that company what to trade. Or their spouse does the trades instead of them.
- pwillia7 5y ago
  *purposeful loopholes
  - throwaway894345 5y ago
    I don’t think it’s “purposeful” as much as the fact that the fundamental fungibility of money makes it very hard to write legislation that covers a reasonable amount of loopholes. Or rather, while purposeful loopholes could exist, it’s very hard to prevent legislators trading stocks even if there were no deliberate loopholes.
    - pwillia7 5y ago
      Almost every other facet of the law rests somewhat on 'common sense' and what 'reasonable people would do' I don't see why the laws couldn't be like that, but I take your point.
      - throwaway894345 5y ago
        Without getting into abstract legal philosophy, I think we can agree that this is effectively about insider trading (literally we're talking about trading on inside information) and insider trading is notoriously difficult to prosecute. Personally I think it's worth creating a law like our insider trading laws, with big punitive sentences to dissuade congresspeople from taking the risk. But I don't expect it to significantly outperform extant insider trading legislation.
- alkonaut 5y ago
  "Make a company"? You mean they would own it? That's obviously the same thing. That would be as illegal as owning any other stock. Spouses trading is as simple to monitor as it is for all other insider trading. But more importantly: if there was a ban, or even a recommendation against it, and the media did its job, then being caught making peronal financial gain from your political office would make you unelectable. The strange thing about US politics is that it's not just accepted but expected. This is the cultural change that's needed. Whether or not there are legal loopholes shouldn't matter so much. Politicians are scrutinized by media and judged by the public. Courts aren't even required.
- Pxtl 5y ago
  Yeah, the spousal loophole is a hard one. Having an elected position restricting a spouse isn't right, but the fact that money can flow freely within a marriage basically annihilates any restrictions. Other non-marital transactions can be controlled - that's the basis of half the tax system in every country. The moment money leaves a household or arrives in a household, there are laws about the transaction. But within a household? All bets are off.
  - ctennis1 5y ago
    Not really - I work for a company in the financial space and my spouse is restricted on any trading they can do just like I am.
    - Pxtl 5y ago
      Today I Learned... of course, the distinction might be that firing an elected official is far more complicated than firing a hired fintech guy.
Traubenfuchs 5y ago
And their partners, parents, children, friends? This problem looks unsolvable to me.
- darig 5y ago
  Corrupt politicians and their partners, parents, children, and friends could all be publicly beheaded in a group at the slightest whiff of impropriety. Sell tickets.
- s_Hogg 5y ago
  Maybe with that attitude :) Part of solving the problem is legislation, part of it is cultural. If you don't have both, then sure, it's too hard.
  - gooseus 5y ago
    I think the biggest part is enforcement, which is confounded by the fact that many of these politicians can pull strings for and against the people who are supposed to do the enforcement. Is anyone at the SEC really going to use resources to piss off a congressperson by investigating whether their nephew's father-in-law used insider information when they made a certain trade? Not if they have other cases they can spend their resources on which won't potentially hinder their own careers.
- Apocryphon 5y ago
  They prevent the family of employees of companies that host contests and sweepstakes from participating, don’t they?
  - mschuster91 5y ago
    That's more a "we're free to claw back the prize if we discover you ignored it" rule than anything else effective.
  - giantg2 5y ago
    And the SEC monitors people's family if they work in a regulated role.
kory 5y ago
Banning stock trading for lawmakers in any form will even moreso restrict these positions to very wealthy people. If you’re worth several million, stock trading restrictions don’t change much. If you aren’t, they could be a big deciding factor in the quality of your housing or retirement.
- unethical_ban 5y ago
  I didn't RTFM, but I imagine the difference would be between "sending my investment money to a trusted, independent broker to be put into index funds" and "personally trading stocks over which I have legislative responsibilities".
- harryh 5y ago
  I don't think anyone is talking about banning lawmakers from investing in broad market indexes and the like. They're talking about banning buying and selling individual stocks because that opens the door to trading on non-public information they receive as government officials. For the vast majority of people this kind of passive index based investing is actually what will lead to the best returns overall. So I don't think your conclusion that this sort of change would restrict public office to very wealthy people is correct.
wayoutthere 5y ago
Great! Pretty sure this is not controversial among the voting public. However, the lawmakers will never vote on a law to ban trading on non-public knowledge because this kind of insider trading is frequently the reason they’re in politics in the first place. We have long since passed the time where community service drove public officials to run; it’s all about getting rich. Even the few true believers like Bernie Sanders can’t help themselves from dabbling a bit; and he’s basically the exception that proves the rule.
- mattwad 5y ago
  Source for Bernie Sanders?
athenot 5y ago
At aa high level, if one is involved in shaping policy which can then affect stock prices, it's no different than insider trading. It's just that it's not limited to a single company.
camjohnson26 5y ago
Particularly bad violations have been the Fed presidents making multimillion dollar trades with personal accounts, and Nancy Pelosi’s husband apparently directly trading on privileged information. https://www.cnbc.com/2021/09/16/fed-chief-powell-orders-ethics-review-after-multimillion-dollar-trades.html https://www.cnbc.com/2021/09/16/fed-chief-powell-orders-ethi... https://fortune.com/2021/07/08/house-speaker-nancy-pelosi-husband-paul-big-tech-stocks/ https://fortune.com/2021/07/08/house-speaker-nancy-pelosi-hu...
- bastardoperator 5y ago
  It's widespread, republicans seem to be doing it more though https://www.nytimes.com/2020/12/02/us/politics/david-perdue-stock-trades.html https://www.nytimes.com/2020/12/02/us/politics/david-perdue-... https://www.cnbc.com/2021/01/19/doj-will-not-charge-sen-richard-burr-for-covid-stock-trades.html https://www.cnbc.com/2021/01/19/doj-will-not-charge-sen-rich... https://www.washingtonpost.com/politics/2021/08/11/rand-paul-gilead-stock/ https://www.washingtonpost.com/politics/2021/08/11/rand-paul... https://tulsaworld.com/news/u-s-sen-jim-inhofe-responds-after-stock-deal-draws-scrutiny/article_0165940a-44ca-57fb-983e-7ebce0a6254b.html https://tulsaworld.com/news/u-s-sen-jim-inhofe-responds-afte...
  - 8b16380d 5y ago
    They are just reported on more. This problem is party agnostic.
  - leesalminen 5y ago
    Bernie Sanders is worth $3 million and has never worked outside of politics in his entire life. Maybe that seems like not a lot to the SV types, but it’s far, far more than what most people I know have to show for a lifetime of actually hard work. https://finance.yahoo.com/news/rich-bernie-sanders-210000864.html https://finance.yahoo.com/news/rich-bernie-sanders-210000864...
    - sdfjksbdf 5y ago
      It's from selling books. What is your point?
themanmaran 5y ago
Outright banning trades will only obscure congressional trading (shell corps, friends/family, etc.) I would prefer a public registry listing all congressional trades. I know this is legally available data, but very difficult to access.
- gruez 5y ago
  > Outright banning trades will only obscure congressional trading (shell corps, friends/family, etc.) >I would prefer a public registry listing all congressional trades Wouldn't your proposal obscure congressional trading as well, because they want to preserve their alpha by not publishing their trades?
  - nv-vn 5y ago
    Well they only publish trades ~30 days later. There's no real chance of front-running a politician and for all you know they could've closed their position before the 30 day period ended. Plus, if people follow them into the trade (i.e. people buy because Pelosi bought) that only moves the price in the politician's favor. It's not like politicians are running crazy strategies that you can figure out from their trades, so I can't really imagine it creating any incentive to hide trades
  - HWR_14 5y ago
    Once their trades are done, publishing them should only increase their alpha. I mean, Buffet's purchases can move the price before he's done buying stock, but congresspeople don't move that much cash.
  - koheripbal 5y ago
    No, it would be the opposite. If people think they have access to privileged information then they will follow their trades, making them profitable even if they are bad trades. First movers always win.
  - camjohnson26 5y ago
    The argument can be made that insider trading isn’t actually a bad thing as long as it’s legal, precisely because allowing that information to trickle into the markets destroys alpha. Anyone who thinks hedge funds aren’t constantly trading on insider information has their head in the sand. Of course then you have problems where people with private information are incentivized to leak that information, which is bad for national security and other areas where secrecy is needed, but we already have laws protecting that information without adding insider trading to them. It would need to be studied and to my knowledge no one has done that work yet, but I haven’t seen anyone establish why insider trading is a net bad for society, other than intuitive reasoning.
BryanBeshore 5y ago
The Nancy Pelosi family office is one investment vehicle I’d like to invest in.
- azemetre 5y ago
  Just buy ITM leaps, it's what her husband typically does (leaps in Tesla, Disney, Roblox last time I looked).
_wldu 5y ago
We should also do away with the steak dinners, golf trips and other 'perks' that lobbyists/vendors give them in exchange for votes.
- koheripbal 5y ago
  So meetings can not take place over a meal? ...or are you specifically saying they can only order certain dishes? Maybe we should force all meetings with politicians to take place on the floor of a mcdonalds. No chairs - that would be too fancy.
  - _wldu 5y ago
    Right. And no 'working' conferences on tropical island resorts with 5,000 dollar per night rooms.
  - 34679 5y ago
    Have you never split a check before?
  - intrepidhero 5y ago
    Rank and file civil servants have very strict rules around what they can and cannot accept from a vendor. Same for investing actually, the rules around who can in invest in what depend on their decision making responsibilities. I'm baffled why we don't hold elected officials to the same standards.
  - cameronhowe 5y ago
    Of courses they can, you just have to pay for your own meal. What are you trying to achieve with your sarcasm? If you have a job you can probably have a look at your ethics or anti corruption guidelines for a good idea of what is appropriate.
  - Kranar 5y ago
    It's already illegal for lobbyists to pay for dinners or meals of any kind, including at a McDonald's.
Pxtl 5y ago
Honestly, pay them more. In every major country, if they're running orgs that have multi-hundred-billion-dollar budgets per year, and you have a few hundred of these people, you can pay them well-enough that sneaking around isn't really profitable. It would not be unreasonable to allocate 0.1% of your budget to compensating the people who control the budget, in exchange for them abandoning their conflict-of-interest positions.
- jakelazaroff 5y ago
  Why would they not just do both, though?
  - koheripbal 5y ago
    Because there's a diminishing return to collecting more and more money. Believe it or not, most rich people stop trying so hard once they hit a certain level.
- barbazoo 5y ago
  I'm not sure their greed can ever be satisfied. How about electing people with a functioning moral compass instead of these muppets clearly only looking out for themselves. Oh wait, that's not possible, then you'd have to vote "for the other side" every now and then.
  - njx 5y ago
    This is it. Greed has no boundaries! ++ "electing people with a functioning moral compass"
giantg2 5y ago
It's the most blatant example of insider trading. Company insiders might have inside access to a single company. Lawmakers have access to inside information that can affect the entire industry or market. It's a perfect example of how we do have class stratification in society and that rule of law and equality are laughably distant ideas in a sea of hypocrisy.
- seventytwo 5y ago
  Good point. Maybe all that’s needed is for better prosecution of insider trading for these guys? Of course the problem is the power they have to resist or meddle in any prosecution efforts… that’s always the problem with holding the powerful to account, I guess.
  - giantg2 5y ago
    The biggest issue in enforcement efforts is not that they can meddle, it's that they are "one of us". They are insiders of the system and other insiders don't want to arrest or prosecute them because there are ulterior motives. One is that if they start arresting and prosecuting insiders for something like this, that may remove the longstanding customs that protect themselves from similar things. There's also the idea of upholding the offices they hold. For example, complaints against judges are so secret that they will not disclose information related to them even if they contain exculpatory information and you subpoena them. Why? Because secrecy is necessary to preserve the public's trust in the system. If anything, that secrecy and reasoning should make any rational person question the integrity of the system. There are also plenty of stories of high profile politicians blatantly ignoring any number of laws and putting people in danger (driving violations are extremely common).
- TomGullen 5y ago
  I'd be more concerned that if a law maker had a million of Tesla stock and Tesla lobbied them, it would take someone with concrete morals to not factor in their potential gains. Humans are not great at making decisions without considering their own incentives - you can trick yourself and your subconscious can sway you.
HelixEndeavor 5y ago
100%. Didn't politicians make a ton of privileged stock bets when they knew COVID was coming here?
ScottMann 5y ago
If you want to avoid accusations of impropriety you need to avoid the appearance that malfeasance has taken place. In other words, don't create an environment where illegal activity is inevitable. If it looks like you did something questionable or wrong there will be people willing to challenge the behavior.
whywhywhywhy 5y ago
I'm completely fine with politicians being paid significantly more if them, their partners and their relatives faced serious prison time is they did the sort of insider trading that is considered completely normal and weirdly they're allowed to do but it's illegal if the lowly plebs do it. End of the day these people are paid very little on paper for the amount of pressure and responsibility yet if you follow their finances they're all building fortunes. Same should apply to funneling money into charities/businesses/"programs" where their relatives are on the boards. They're in such a privileged position I don't consider any of this unreasonable.
- realce 5y ago
  Here here! I think we need to deeply reexamine how much we pay officials. Senators/Governors should probably get triple their current pay with severe penalties for any financial fraud. This was one of the better Andrew Yang points too. Reps have very little financial incentive to do the "right thing" and we could help them realign that incentive by just paying them more.
  - logicchains 5y ago
    > Here here! I think we need to deeply reexamine how much we pay officials. Senators/Governors should probably get triple their current pay with severe penalties for any financial fraud. Singapore is an example of why this doesn't work. It pays the prime minister $5 million/year, in theory to prevent corruption. However he got around this by making his wife CEO of Temasek, Singapore's national investment company which everybody is mandated to invest in via the central provident fund. And it's all perfectly on the books and legal, because the PM creates the law, in spite of the fact that in any other context it'd be considered corruption.
    - InitialLastName 5y ago
      I don't know that Singapore (effectively a single-party state whose PM has dictatorship levels of power) is the best example of how this works in a republic (or sub-republic) with separated powers.
bern4444 5y ago
Trading activity should be limited for federal employees at that level in a similar manner that trading is limited for bank employees and their families. They should be allowed to trade index funds, etfs, mutual funds etc, but perhaps not individual stocks. Or perhaps there should be a bi-annual or quarterly trading period where they're allowed to trade individual stocks. Should they be allowed to also trade derivatives (Options, futures etc)? I think so but with similar restrictions. Perhaps also they should get a raise. Senators and house members make ~175,000. Having to pay for two houses/apartments. It seems a bit low for their relative importance. Perhaps a higher salary would mean they rely less on Wall St too
- wanderindev 5y ago
  Congressional representatives should 100% be held bare minimum to the standard that bank employees are if not more. As per raises, they haven't received one since 2009 and I think it'd definitely make sense to peg that to inflation. In general though, they're securing a pension via this job which even though it's not their full salary it will set them up for retirement better than the average investing would.
  - dragonwriter 5y ago
    > As per raises, they haven't received one since 2009 and I think it'd definitely make sense to peg that to inflation. I think it would make more sense to peg it to the lower of a set multiple of each per capita GDP and median after-tax-benefits adult individual income, with th multiples set so that they both work out equal the current pay now. Rewarding Congress for driving up average consumer prices when they are paid far enough above median income to start that their spending basket is different is...perhaps not well considered. But any peg has a problem that ultimately, whoever is measuring the thing to which pay is pegged is accountable to Congress, so the result is to make the measure less trustworthy by tying Congressional pay to it. Forcing Congress to vote on their pay changes and face election after they do so and before they go into effect, as the last-ratified-amendment of the Bill of Rights requires, is not only Constitutionally-mandatory, but a very good idea.
rrivers 5y ago
This moral outrage seems very convenient given the impending market crash. I wonder how many politicians will come forward announcing the liquidation of their portfolios in good faith to the public, conveniently ahead of the major dip.
WaitWaitWha 5y ago
term limits I think term limits would hamper development of long term relationships with lobbyists, and similar and in turn reduce the occurrence of these trades.
- merrywhether 5y ago
  Or give lobbyists more power over the revolving cast of lawmakers who each want to cash in during their short window of opportunity.
  - WaitWaitWha 5y ago
    Apologies, but I am unclear if you are facetious or serious. (not native English writer.) Can you explain what you mean?
    - merrywhether 5y ago
      Sure, sorry for being a little curt. It’s possible that were politicians only in seat for a short period, some of them would succumb to the incentive to “make the most of it” personally. Since this would leave lobbyists as the most “senior” people on Capitol Hill with the most experience managing these interactions, they’d be able to optimize for providing lucrative payouts to these short-timer politicians. I’m not saying this is guaranteed, just that there are incentives toward that outcome and also that experience gives power in “repeated game” scenarios. A converse example of this is the lifetime appointment for judges, ensuring them stability to help minimize the appeal of maximizing short-term gains.
    - delecti 5y ago
      If a lawmaker knows they'll only be in office for a limited period of time, there's potentially incentive to behave extra dishonestly to maximize how much they can profit. Additionally, however you feel about established lawmakers, the current multi-term career lawmakers are very familiar with the process of making laws. If there's a higher proportion of new lawmakers, then the people most familiar with the process of making laws would be the lobbyists. That could result in them having a larger influence on the whole process. The balance is that newer lawmakers are potentially less corrupted from decades in the system. It's not easy to say what the net result would be.
andrewla 5y ago
Regulation is a poor substitute for criminal prosecution. Law enforcement at the Federal level needs to investigate and prosecute cases where members of Congress have even apparently abused their position for personal profit. Banning stock trading will just push things into more indirect methods; giving law enforcement the power to enforce the law means that the very fact that they attempted to use indirect methods are an indicator of consciousness of guilt.
- Denvercoder9 5y ago
  You can only prosecute after it has been made illegal, though.
  - andrewla 5y ago
    It is illegal [1]. The phrasing is very broad: > (a)Except as permitted by subsection (b) hereof, whoever ... participates personally and substantially as a Government officer or employee ... in a judicial or other proceeding ... in which, to his knowledge, he ... has a financial interest— Shall be subject to the penalties set forth in section 216 of this title. All that is lacking is the willingness of law enforcement (and the executive branch) to take action. [1] https://www.law.cornell.edu/uscode/text/18/208 https://www.law.cornell.edu/uscode/text/18/208
    - Denvercoder9 5y ago
      I'm no lawyer, but I would read that quote as only prohibiting the participation in proceedings when you have a financial interest in the subject matter, but not the other way around: using the knowledge you gained from participating in proceedings to create financial gain afterwards.
mylons 5y ago
this gets brought up every few years. it’s basically click bait at this point. the only way we see change on this is if the corrupt people who can make millions doing almost nothing vote against their own financial interests. there could be riots in the streets but they still wouldn’t restrict their power.
- chapium 5y ago
  In the US at least, the courts can check this power. In theory.
ramblenode 5y ago
Before the STOCK Act passed, Congress outperformed the market by 20%, with some senior Republican leaders doing as well as 35% [0,1]. Before the pandemic began in the US, 4 US Senators were picking up medical stocks after closed-door briefings. Investigations were opened by the DOJ, but they were all dropped. [0] https://www.theatlantic.com/ideas/archive/2020/03/congress-insider-trading-problem/608488/ https://www.theatlantic.com/ideas/archive/2020/03/congress-i... [1] https://onlinelibrary.wiley.com/doi/10.1111/fire.12180 https://onlinelibrary.wiley.com/doi/10.1111/fire.12180
- ckardat123 5y ago
  If anyone is interested, I've been building dashboards that display trades made by U.S. congressmen and estimate their returns over time from their trading while in office. https://www.quiverquant.com/sources/senatetrading https://www.quiverquant.com/sources/senatetrading https://www.quiverquant.com/sources/housetrading https://www.quiverquant.com/sources/housetrading One weakness of the performance visualization is that some of the most extreme results are from people who have only made one or two trades while in office, as their returns are more volatile off of those few transactions.
  - Emma_Goldman 5y ago
    Very cool. It would be good if you could overlay Congress' returns with the returns of the market, or a median institutional investor, for comparison. Also, to disaggregate investments by asset class, active/passive funds, etc., so we can really figure out what's going on. Those things make a big difference. I realise this is a passion project though, and that's probably too much work.
  - nielsbot 5y ago
    What’s the lag time on congressional trade reporting? Too bad it’s not fast enough for me to make the same trades. (And would it be considered insider trading then?)
  - vdalal 5y ago
    https://housestockwatcher.com/ https://housestockwatcher.com/ & https://senatetockwatcher.com/ https://senatetockwatcher.com/ ref: NPR article https://www.npr.org/2021/09/21/1039313011/tiktokers-are-trading-stocks-by-watching-what-members-of-congress-do https://www.npr.org/2021/09/21/1039313011/tiktokers-are-trad...
whatever1 5y ago
If we did not force every single wannabe pensioner to play in the stock market casino, we would not care about the players count cards or have bribed the croupier. But here we are. In a casino. Us the dumb speculators against the skilled players.
deleted 5y ago
[deleted]
kchoudhu 5y ago
Just define a small universe of allowable ETFs and options on those ETFs and be done with it. This is not hard.
atlgator 5y ago
Unfortunately they get around the laws by having their spouse or financial advisor manage the portfolio.
Causality1 5y ago
Holding any elected position should come with a lifetime ban against holding stock in any publicly traded company, full stop. Congressman, president, sheriff, county commissioner, I don't care. Either you're a public servant or you aren't. My position in the government wasn't even an elected one and I still believe the oath I took is fundamentally incompatible with holding stock.
- s1artibartfast 5y ago
  >My position in the government wasn't even an elected one and I still believe the oath I took is fundamentally incompatible with holding stock. This is interesting, can you expand on why you feel this was at odds with public interest?
  - Causality1 5y ago
    Two different ways, in my opinion. The most direct way was the part about serving the people of the United States. I can't do that in a neutral way while actively manipulating the economy, even slightly. The more indirect way is the oath to bear true faith and allegiance to the Constitution. To me "true faith" means much more than following the letter of the law. By and large, companies big enough to IPO are amoral money machines that do all they can to bypass the laws regulating their behavior and ignore the rights of American citizens, and even getting caught is just a line item on their legal budget. I can't participate in a system like that while bearing true faith to my country and Constitution.
    - s1artibartfast 5y ago
      Thanks for the response. While I don't agree that stocks and companies are counter to the public good, I understand how someone could feel this way. How do you personally invest and save if you avoid stocks?
- barrenko 5y ago
  Really, all of our political problems were more or less solved in ancient Rome.
fspacef 5y ago
This really makes common sense, why should lawmakers who have access to privileged information be allowed to execute stock trades. This only beuilds more resentment from the common man.
misiti3780 5y ago
I think the easiest solution is they should not be allow to buy individual stocks + options. Only indexes.
BirdPlusPlus 5y ago
Federal lawmakers aren't capable of NOT insider trading.
naveen99 5y ago
If I were supreme, I’d make all publicly traded trades public. Publish the identities of the trading counterparties along with the volume and price of the trade. I mean these markets are supposed to be public. You get better price discovery and less stealing from insider information… to know your counterparty is like rule number 1 in any business. Somehow in the ambiguously public, public markets, it’s private.
ArchStanton 5y ago
I have no problem with lawmakers making stock trades, but you can certainly argue that it is immediately made public. To be fair, there are probably edge conditions where a congressman has direct control over the financial realities of a publicly related company. I think the more heinous cases are lawmakers becoming lobbyists and (worse) lawmakers making huge bucks on public speaking which is a very thinly veiled bit of influence peddling. Believe me, the Clintons didn't get paid $153M to give short speeches. (https://www.cnn.com/2016/02/05/politics/hillary-clinton-bill-clinton-paid-speeches/index.html https://www.cnn.com/2016/02/05/politics/hillary-clinton-bill... ) I suppose when you get down to it, as government becomes more powerful it becomes more gameable.
- bencollier49 5y ago
  Came here to say the same thing. Trades by lawmakers should be instantaneously public.
  - 93po 5y ago
    They'd just use shell corporations or friends/family in that case. The only people who would still trade under their name have nothing to hide to begin with and aren't the problem we're trying to solve.
    - webinvest 5y ago
      Don’t underestimate the power of default options
bjourne 5y ago
When discussing doping in sports people are generally receptive to the following argument: Athletes will do everything they can to dope because the benefits far outweighs the drawbacks. It is probable that many of the world's top athletes are doped. However, when discussing financial trading people are generally not receptive to the following argument: Stock traders will do everything they can to exploit inside information because the benefits far outweighs the drawbacks. It is probable that those who consistently outperform indexes exploit inside information. Why the discrepancy? Do people believe that successful stock traders in general are more honest and law-abiding than top athletes?
- t-3 5y ago
  > Why the discrepancy? Do people believe that successful stock traders in general are more honest and law-abiding than top athletes? It's probably more to due with your audience than "people in general". The type of people who can/will discuss financial markets tend to be invested in financial markets, and thus do not want to understand. If you have your sense of self-worth (in more ways than one), tied up in the numbers in your brokerage account, would you readily accept the idea that your heros and "investment mentors" are cheats and liars? How many amateur athletes would believe that professionals are all doping relative the broader population that is not so invested in sports?
- s1artibartfast 5y ago
  My understanding is that doping in sports is largely a solved problem at this point. I believe I have to submit biological samples witch are preserved indefinitely. Provides a significant barrier because future Technologies 10 allow retrospective analysis. Sure there are tons of athletes that modify and enhance their performance up to the Limit of acceptability, but I think there are the Wild West of doping is a thing of the past.
gabella 5y ago
As for me, shares are very convenient for a certain category of the population. And also profitable.
brandonmenc 5y ago
Good luck with that. This will be impossible to enforce. The wealthiest lawmakers will get around it, and the middle class lawmakers will be saddled with the burden of shuffling their entire investment portfolio around. It's unreasonable in practice. (imo, everything is "insider trading" if you squint hard enough. Another losing battle.) Impose term limits or stfu.
antattack 5y ago
Just when was it that many thought it was a good idea?
javier10e6 5y ago
It might read unrelated yet, term limits is the only concrete way to limit the damage of a corrupt lawmaker.
jedberg 5y ago
When an insider wants to sell stock, they are required to file a form announcing their intentions ahead of time, giving the market a chance to front-run them and/or react to their sales. Since Congresspeople are the ultimate insiders, they should be required to file the same forms, so that the American public can analyze and front-run them. Not just Congresspeople, but anyone who works in the Government with access to secret information, especially secret financial reports.
AlbertCory 5y ago
This is strictly about the headline, not the article. Lawmakers should, indeed, be required to put all their holdings into a blind trust for the duration of their service, at least. "Many believe" is the sort of garbage phrase that "journalists" and their headline writers use nowadays. It's purely a way of laundering your personal beliefs. Who are these "many"? Just the friends of the journalist?
JasonFruit 5y ago
I'd be interested to know how often Congressional stock trades have been used to reason about classified information, i.e. a number of senators invest in a certain stock, implying that a suspected but classified decision went a certain way.
literallyaduck 5y ago
Congress should be sequestered while in office and all financial activities frozen. If they want to trade again they can start a year after they leave office and get out of sequestration. No aids, no spouses, and every moment recorded for the public record.
imglorp 5y ago
How about all branches, judicial, executive, and legislative? Emoluments and conflict of interest seem equally harmful in all.
CrazyPyroLinux 5y ago
Instead of doing away with stock trades, the better approach would be to do away with "lawmakers."
mrtweetyhack 5y ago
at least that under-the-table stuff still works
kristjansson 5y ago
Of all the ways for a congressperson to transform her access and power into personal wealth, trading on inside information is close to socially optimal. It’s basically victimless (unlike graft), doesn’t necessarily[1] distort incentives toward good policy or law (unlike accepting bribes), and doesn’t impose a direct cost on taxpayers (like increasing salaries). If we can’t foreclose all of the avenues from power and access to wealth, we should let them have the least harmful one and clamp down on the others. Hell, we should give them a million on margin and at the start of their term. Note that the simple solution of ‘less venal congresspeople’ is outside feasible region. [1] obviously concentrated positions could distort policy choices, but they could be prevented from holding more than x% in one name for more than y quarters of disclosure.
audiometry 5y ago
It’s so gross that they do this. When I worked at banks on Wall Street, they all had onerous approval processes for employees to trade. Pre-approvals that lasted for one day only etc. All these rules attempting to prevent insider trading. Amazing that these scummy Fed employees and congressmen don’t have any encumberence like that. So gross.
createunderrate 5y ago
I have always thought politicians should take a vow of average wealth. You don't get more money unless we do, too.
morpheos137 5y ago
If you write good law you should be able to reap some amount of the financial rewards.

557 points by DocFeind 5y ago

There are so many loop holes. I mean then they just make a company that does stock trades for them and tell that company what to trade. Or their spouse does the trades instead of them.

pwillia7 5y ago
*purposeful loopholes
- throwaway894345 5y ago
  I don’t think it’s “purposeful” as much as the fact that the fundamental fungibility of money makes it very hard to write legislation that covers a reasonable amount of loopholes. Or rather, while purposeful loopholes could exist, it’s very hard to prevent legislators trading stocks even if there were no deliberate loopholes.
  - pwillia7 5y ago
    Almost every other facet of the law rests somewhat on 'common sense' and what 'reasonable people would do' I don't see why the laws couldn't be like that, but I take your point.
    - throwaway894345 5y ago
      Without getting into abstract legal philosophy, I think we can agree that this is effectively about insider trading (literally we're talking about trading on inside information) and insider trading is notoriously difficult to prosecute. Personally I think it's worth creating a law like our insider trading laws, with big punitive sentences to dissuade congresspeople from taking the risk. But I don't expect it to significantly outperform extant insider trading legislation.
alkonaut 5y ago
"Make a company"? You mean they would own it? That's obviously the same thing. That would be as illegal as owning any other stock. Spouses trading is as simple to monitor as it is for all other insider trading. But more importantly: if there was a ban, or even a recommendation against it, and the media did its job, then being caught making peronal financial gain from your political office would make you unelectable. The strange thing about US politics is that it's not just accepted but expected. This is the cultural change that's needed. Whether or not there are legal loopholes shouldn't matter so much. Politicians are scrutinized by media and judged by the public. Courts aren't even required.
Pxtl 5y ago
Yeah, the spousal loophole is a hard one. Having an elected position restricting a spouse isn't right, but the fact that money can flow freely within a marriage basically annihilates any restrictions. Other non-marital transactions can be controlled - that's the basis of half the tax system in every country. The moment money leaves a household or arrives in a household, there are laws about the transaction. But within a household? All bets are off.
- ctennis1 5y ago
  Not really - I work for a company in the financial space and my spouse is restricted on any trading they can do just like I am.
  - Pxtl 5y ago
    Today I Learned... of course, the distinction might be that firing an elected official is far more complicated than firing a hired fintech guy.

Traubenfuchs 5y ago

And their partners, parents, children, friends? This problem looks unsolvable to me.

darig 5y ago
Corrupt politicians and their partners, parents, children, and friends could all be publicly beheaded in a group at the slightest whiff of impropriety. Sell tickets.
s_Hogg 5y ago
Maybe with that attitude :) Part of solving the problem is legislation, part of it is cultural. If you don't have both, then sure, it's too hard.
- gooseus 5y ago
  I think the biggest part is enforcement, which is confounded by the fact that many of these politicians can pull strings for and against the people who are supposed to do the enforcement. Is anyone at the SEC really going to use resources to piss off a congressperson by investigating whether their nephew's father-in-law used insider information when they made a certain trade? Not if they have other cases they can spend their resources on which won't potentially hinder their own careers.
Apocryphon 5y ago
They prevent the family of employees of companies that host contests and sweepstakes from participating, don’t they?
- mschuster91 5y ago
  That's more a "we're free to claw back the prize if we discover you ignored it" rule than anything else effective.
- giantg2 5y ago
  And the SEC monitors people's family if they work in a regulated role.

kory 5y ago

Banning stock trading for lawmakers in any form will even moreso restrict these positions to very wealthy people. If you’re worth several million, stock trading restrictions don’t change much. If you aren’t, they could be a big deciding factor in the quality of your housing or retirement.

unethical_ban 5y ago
I didn't RTFM, but I imagine the difference would be between "sending my investment money to a trusted, independent broker to be put into index funds" and "personally trading stocks over which I have legislative responsibilities".
harryh 5y ago
I don't think anyone is talking about banning lawmakers from investing in broad market indexes and the like. They're talking about banning buying and selling individual stocks because that opens the door to trading on non-public information they receive as government officials. For the vast majority of people this kind of passive index based investing is actually what will lead to the best returns overall. So I don't think your conclusion that this sort of change would restrict public office to very wealthy people is correct.

wayoutthere 5y ago

Great! Pretty sure this is not controversial among the voting public. However, the lawmakers will never vote on a law to ban trading on non-public knowledge because this kind of insider trading is frequently the reason they’re in politics in the first place. We have long since passed the time where community service drove public officials to run; it’s all about getting rich. Even the few true believers like Bernie Sanders can’t help themselves from dabbling a bit; and he’s basically the exception that proves the rule.

mattwad 5y ago
Source for Bernie Sanders?

athenot 5y ago

At aa high level, if one is involved in shaping policy which can then affect stock prices, it's no different than insider trading. It's just that it's not limited to a single company.

camjohnson26 5y ago

Particularly bad violations have been the Fed presidents making multimillion dollar trades with personal accounts, and Nancy Pelosi’s husband apparently directly trading on privileged information. https://www.cnbc.com/2021/09/16/fed-chief-powell-orders-ethics-review-after-multimillion-dollar-trades.html https://www.cnbc.com/2021/09/16/fed-chief-powell-orders-ethi... https://fortune.com/2021/07/08/house-speaker-nancy-pelosi-husband-paul-big-tech-stocks/ https://fortune.com/2021/07/08/house-speaker-nancy-pelosi-hu...

bastardoperator 5y ago
It's widespread, republicans seem to be doing it more though https://www.nytimes.com/2020/12/02/us/politics/david-perdue-stock-trades.html https://www.nytimes.com/2020/12/02/us/politics/david-perdue-... https://www.cnbc.com/2021/01/19/doj-will-not-charge-sen-richard-burr-for-covid-stock-trades.html https://www.cnbc.com/2021/01/19/doj-will-not-charge-sen-rich... https://www.washingtonpost.com/politics/2021/08/11/rand-paul-gilead-stock/ https://www.washingtonpost.com/politics/2021/08/11/rand-paul... https://tulsaworld.com/news/u-s-sen-jim-inhofe-responds-after-stock-deal-draws-scrutiny/article_0165940a-44ca-57fb-983e-7ebce0a6254b.html https://tulsaworld.com/news/u-s-sen-jim-inhofe-responds-afte...
- 8b16380d 5y ago
  They are just reported on more. This problem is party agnostic.
- leesalminen 5y ago
  Bernie Sanders is worth $3 million and has never worked outside of politics in his entire life. Maybe that seems like not a lot to the SV types, but it’s far, far more than what most people I know have to show for a lifetime of actually hard work. https://finance.yahoo.com/news/rich-bernie-sanders-210000864.html https://finance.yahoo.com/news/rich-bernie-sanders-210000864...
  - sdfjksbdf 5y ago
    It's from selling books. What is your point?

themanmaran 5y ago

Outright banning trades will only obscure congressional trading (shell corps, friends/family, etc.) I would prefer a public registry listing all congressional trades. I know this is legally available data, but very difficult to access.

gruez 5y ago
> Outright banning trades will only obscure congressional trading (shell corps, friends/family, etc.) >I would prefer a public registry listing all congressional trades Wouldn't your proposal obscure congressional trading as well, because they want to preserve their alpha by not publishing their trades?
- nv-vn 5y ago
  Well they only publish trades ~30 days later. There's no real chance of front-running a politician and for all you know they could've closed their position before the 30 day period ended. Plus, if people follow them into the trade (i.e. people buy because Pelosi bought) that only moves the price in the politician's favor. It's not like politicians are running crazy strategies that you can figure out from their trades, so I can't really imagine it creating any incentive to hide trades
- HWR_14 5y ago
  Once their trades are done, publishing them should only increase their alpha. I mean, Buffet's purchases can move the price before he's done buying stock, but congresspeople don't move that much cash.
- koheripbal 5y ago
  No, it would be the opposite. If people think they have access to privileged information then they will follow their trades, making them profitable even if they are bad trades. First movers always win.
- camjohnson26 5y ago
  The argument can be made that insider trading isn’t actually a bad thing as long as it’s legal, precisely because allowing that information to trickle into the markets destroys alpha. Anyone who thinks hedge funds aren’t constantly trading on insider information has their head in the sand. Of course then you have problems where people with private information are incentivized to leak that information, which is bad for national security and other areas where secrecy is needed, but we already have laws protecting that information without adding insider trading to them. It would need to be studied and to my knowledge no one has done that work yet, but I haven’t seen anyone establish why insider trading is a net bad for society, other than intuitive reasoning.

BryanBeshore 5y ago

The Nancy Pelosi family office is one investment vehicle I’d like to invest in.

azemetre 5y ago
Just buy ITM leaps, it's what her husband typically does (leaps in Tesla, Disney, Roblox last time I looked).

_wldu 5y ago

We should also do away with the steak dinners, golf trips and other 'perks' that lobbyists/vendors give them in exchange for votes.

koheripbal 5y ago
So meetings can not take place over a meal? ...or are you specifically saying they can only order certain dishes? Maybe we should force all meetings with politicians to take place on the floor of a mcdonalds. No chairs - that would be too fancy.
- _wldu 5y ago
  Right. And no 'working' conferences on tropical island resorts with 5,000 dollar per night rooms.
- 34679 5y ago
  Have you never split a check before?
- intrepidhero 5y ago
  Rank and file civil servants have very strict rules around what they can and cannot accept from a vendor. Same for investing actually, the rules around who can in invest in what depend on their decision making responsibilities. I'm baffled why we don't hold elected officials to the same standards.
- cameronhowe 5y ago
  Of courses they can, you just have to pay for your own meal. What are you trying to achieve with your sarcasm? If you have a job you can probably have a look at your ethics or anti corruption guidelines for a good idea of what is appropriate.
- Kranar 5y ago
  It's already illegal for lobbyists to pay for dinners or meals of any kind, including at a McDonald's.

Pxtl 5y ago

Honestly, pay them more. In every major country, if they're running orgs that have multi-hundred-billion-dollar budgets per year, and you have a few hundred of these people, you can pay them well-enough that sneaking around isn't really profitable. It would not be unreasonable to allocate 0.1% of your budget to compensating the people who control the budget, in exchange for them abandoning their conflict-of-interest positions.

jakelazaroff 5y ago
Why would they not just do both, though?
- koheripbal 5y ago
  Because there's a diminishing return to collecting more and more money. Believe it or not, most rich people stop trying so hard once they hit a certain level.
barbazoo 5y ago
I'm not sure their greed can ever be satisfied. How about electing people with a functioning moral compass instead of these muppets clearly only looking out for themselves. Oh wait, that's not possible, then you'd have to vote "for the other side" every now and then.
- njx 5y ago
  This is it. Greed has no boundaries! ++ "electing people with a functioning moral compass"

giantg2 5y ago

It's the most blatant example of insider trading. Company insiders might have inside access to a single company. Lawmakers have access to inside information that can affect the entire industry or market. It's a perfect example of how we do have class stratification in society and that rule of law and equality are laughably distant ideas in a sea of hypocrisy.

seventytwo 5y ago
Good point. Maybe all that’s needed is for better prosecution of insider trading for these guys? Of course the problem is the power they have to resist or meddle in any prosecution efforts… that’s always the problem with holding the powerful to account, I guess.
- giantg2 5y ago
  The biggest issue in enforcement efforts is not that they can meddle, it's that they are "one of us". They are insiders of the system and other insiders don't want to arrest or prosecute them because there are ulterior motives. One is that if they start arresting and prosecuting insiders for something like this, that may remove the longstanding customs that protect themselves from similar things. There's also the idea of upholding the offices they hold. For example, complaints against judges are so secret that they will not disclose information related to them even if they contain exculpatory information and you subpoena them. Why? Because secrecy is necessary to preserve the public's trust in the system. If anything, that secrecy and reasoning should make any rational person question the integrity of the system. There are also plenty of stories of high profile politicians blatantly ignoring any number of laws and putting people in danger (driving violations are extremely common).
TomGullen 5y ago
I'd be more concerned that if a law maker had a million of Tesla stock and Tesla lobbied them, it would take someone with concrete morals to not factor in their potential gains. Humans are not great at making decisions without considering their own incentives - you can trick yourself and your subconscious can sway you.

HelixEndeavor 5y ago

100%. Didn't politicians make a ton of privileged stock bets when they knew COVID was coming here?

ScottMann 5y ago

If you want to avoid accusations of impropriety you need to avoid the appearance that malfeasance has taken place. In other words, don't create an environment where illegal activity is inevitable. If it looks like you did something questionable or wrong there will be people willing to challenge the behavior.

whywhywhywhy 5y ago

I'm completely fine with politicians being paid significantly more if them, their partners and their relatives faced serious prison time is they did the sort of insider trading that is considered completely normal and weirdly they're allowed to do but it's illegal if the lowly plebs do it. End of the day these people are paid very little on paper for the amount of pressure and responsibility yet if you follow their finances they're all building fortunes. Same should apply to funneling money into charities/businesses/"programs" where their relatives are on the boards. They're in such a privileged position I don't consider any of this unreasonable.

realce 5y ago
Here here! I think we need to deeply reexamine how much we pay officials. Senators/Governors should probably get triple their current pay with severe penalties for any financial fraud. This was one of the better Andrew Yang points too. Reps have very little financial incentive to do the "right thing" and we could help them realign that incentive by just paying them more.
- logicchains 5y ago
  > Here here! I think we need to deeply reexamine how much we pay officials. Senators/Governors should probably get triple their current pay with severe penalties for any financial fraud. Singapore is an example of why this doesn't work. It pays the prime minister $5 million/year, in theory to prevent corruption. However he got around this by making his wife CEO of Temasek, Singapore's national investment company which everybody is mandated to invest in via the central provident fund. And it's all perfectly on the books and legal, because the PM creates the law, in spite of the fact that in any other context it'd be considered corruption.
  - InitialLastName 5y ago
    I don't know that Singapore (effectively a single-party state whose PM has dictatorship levels of power) is the best example of how this works in a republic (or sub-republic) with separated powers.

bern4444 5y ago

Trading activity should be limited for federal employees at that level in a similar manner that trading is limited for bank employees and their families. They should be allowed to trade index funds, etfs, mutual funds etc, but perhaps not individual stocks. Or perhaps there should be a bi-annual or quarterly trading period where they're allowed to trade individual stocks. Should they be allowed to also trade derivatives (Options, futures etc)? I think so but with similar restrictions. Perhaps also they should get a raise. Senators and house members make ~175,000. Having to pay for two houses/apartments. It seems a bit low for their relative importance. Perhaps a higher salary would mean they rely less on Wall St too

wanderindev 5y ago
Congressional representatives should 100% be held bare minimum to the standard that bank employees are if not more. As per raises, they haven't received one since 2009 and I think it'd definitely make sense to peg that to inflation. In general though, they're securing a pension via this job which even though it's not their full salary it will set them up for retirement better than the average investing would.
- dragonwriter 5y ago
  > As per raises, they haven't received one since 2009 and I think it'd definitely make sense to peg that to inflation. I think it would make more sense to peg it to the lower of a set multiple of each per capita GDP and median after-tax-benefits adult individual income, with th multiples set so that they both work out equal the current pay now. Rewarding Congress for driving up average consumer prices when they are paid far enough above median income to start that their spending basket is different is...perhaps not well considered. But any peg has a problem that ultimately, whoever is measuring the thing to which pay is pegged is accountable to Congress, so the result is to make the measure less trustworthy by tying Congressional pay to it. Forcing Congress to vote on their pay changes and face election after they do so and before they go into effect, as the last-ratified-amendment of the Bill of Rights requires, is not only Constitutionally-mandatory, but a very good idea.

rrivers 5y ago

This moral outrage seems very convenient given the impending market crash. I wonder how many politicians will come forward announcing the liquidation of their portfolios in good faith to the public, conveniently ahead of the major dip.

WaitWaitWha 5y ago

term limits I think term limits would hamper development of long term relationships with lobbyists, and similar and in turn reduce the occurrence of these trades.

merrywhether 5y ago
Or give lobbyists more power over the revolving cast of lawmakers who each want to cash in during their short window of opportunity.
- WaitWaitWha 5y ago
  Apologies, but I am unclear if you are facetious or serious. (not native English writer.) Can you explain what you mean?
  - merrywhether 5y ago
    Sure, sorry for being a little curt. It’s possible that were politicians only in seat for a short period, some of them would succumb to the incentive to “make the most of it” personally. Since this would leave lobbyists as the most “senior” people on Capitol Hill with the most experience managing these interactions, they’d be able to optimize for providing lucrative payouts to these short-timer politicians. I’m not saying this is guaranteed, just that there are incentives toward that outcome and also that experience gives power in “repeated game” scenarios. A converse example of this is the lifetime appointment for judges, ensuring them stability to help minimize the appeal of maximizing short-term gains.
  - delecti 5y ago
    If a lawmaker knows they'll only be in office for a limited period of time, there's potentially incentive to behave extra dishonestly to maximize how much they can profit. Additionally, however you feel about established lawmakers, the current multi-term career lawmakers are very familiar with the process of making laws. If there's a higher proportion of new lawmakers, then the people most familiar with the process of making laws would be the lobbyists. That could result in them having a larger influence on the whole process. The balance is that newer lawmakers are potentially less corrupted from decades in the system. It's not easy to say what the net result would be.

andrewla 5y ago

Regulation is a poor substitute for criminal prosecution. Law enforcement at the Federal level needs to investigate and prosecute cases where members of Congress have even apparently abused their position for personal profit. Banning stock trading will just push things into more indirect methods; giving law enforcement the power to enforce the law means that the very fact that they attempted to use indirect methods are an indicator of consciousness of guilt.

Denvercoder9 5y ago
You can only prosecute after it has been made illegal, though.
- andrewla 5y ago
  It is illegal [1]. The phrasing is very broad: > (a)Except as permitted by subsection (b) hereof, whoever ... participates personally and substantially as a Government officer or employee ... in a judicial or other proceeding ... in which, to his knowledge, he ... has a financial interest— Shall be subject to the penalties set forth in section 216 of this title. All that is lacking is the willingness of law enforcement (and the executive branch) to take action. [1] https://www.law.cornell.edu/uscode/text/18/208 https://www.law.cornell.edu/uscode/text/18/208
  - Denvercoder9 5y ago
    I'm no lawyer, but I would read that quote as only prohibiting the participation in proceedings when you have a financial interest in the subject matter, but not the other way around: using the knowledge you gained from participating in proceedings to create financial gain afterwards.

mylons 5y ago

this gets brought up every few years. it’s basically click bait at this point. the only way we see change on this is if the corrupt people who can make millions doing almost nothing vote against their own financial interests. there could be riots in the streets but they still wouldn’t restrict their power.

chapium 5y ago
In the US at least, the courts can check this power. In theory.

ramblenode 5y ago

Before the STOCK Act passed, Congress outperformed the market by 20%, with some senior Republican leaders doing as well as 35% [0,1]. Before the pandemic began in the US, 4 US Senators were picking up medical stocks after closed-door briefings. Investigations were opened by the DOJ, but they were all dropped. [0] https://www.theatlantic.com/ideas/archive/2020/03/congress-insider-trading-problem/608488/ https://www.theatlantic.com/ideas/archive/2020/03/congress-i... [1] https://onlinelibrary.wiley.com/doi/10.1111/fire.12180 https://onlinelibrary.wiley.com/doi/10.1111/fire.12180

ckardat123 5y ago
If anyone is interested, I've been building dashboards that display trades made by U.S. congressmen and estimate their returns over time from their trading while in office. https://www.quiverquant.com/sources/senatetrading https://www.quiverquant.com/sources/senatetrading https://www.quiverquant.com/sources/housetrading https://www.quiverquant.com/sources/housetrading One weakness of the performance visualization is that some of the most extreme results are from people who have only made one or two trades while in office, as their returns are more volatile off of those few transactions.
- Emma_Goldman 5y ago
  Very cool. It would be good if you could overlay Congress' returns with the returns of the market, or a median institutional investor, for comparison. Also, to disaggregate investments by asset class, active/passive funds, etc., so we can really figure out what's going on. Those things make a big difference. I realise this is a passion project though, and that's probably too much work.
- nielsbot 5y ago
  What’s the lag time on congressional trade reporting? Too bad it’s not fast enough for me to make the same trades. (And would it be considered insider trading then?)
- vdalal 5y ago
  https://housestockwatcher.com/ https://housestockwatcher.com/ & https://senatetockwatcher.com/ https://senatetockwatcher.com/ ref: NPR article https://www.npr.org/2021/09/21/1039313011/tiktokers-are-trading-stocks-by-watching-what-members-of-congress-do https://www.npr.org/2021/09/21/1039313011/tiktokers-are-trad...

whatever1 5y ago

If we did not force every single wannabe pensioner to play in the stock market casino, we would not care about the players count cards or have bribed the croupier. But here we are. In a casino. Us the dumb speculators against the skilled players.

deleted 5y ago

[deleted]

kchoudhu 5y ago

Just define a small universe of allowable ETFs and options on those ETFs and be done with it. This is not hard.

atlgator 5y ago

Unfortunately they get around the laws by having their spouse or financial advisor manage the portfolio.

Causality1 5y ago

Holding any elected position should come with a lifetime ban against holding stock in any publicly traded company, full stop. Congressman, president, sheriff, county commissioner, I don't care. Either you're a public servant or you aren't. My position in the government wasn't even an elected one and I still believe the oath I took is fundamentally incompatible with holding stock.

s1artibartfast 5y ago
>My position in the government wasn't even an elected one and I still believe the oath I took is fundamentally incompatible with holding stock. This is interesting, can you expand on why you feel this was at odds with public interest?
- Causality1 5y ago
  Two different ways, in my opinion. The most direct way was the part about serving the people of the United States. I can't do that in a neutral way while actively manipulating the economy, even slightly. The more indirect way is the oath to bear true faith and allegiance to the Constitution. To me "true faith" means much more than following the letter of the law. By and large, companies big enough to IPO are amoral money machines that do all they can to bypass the laws regulating their behavior and ignore the rights of American citizens, and even getting caught is just a line item on their legal budget. I can't participate in a system like that while bearing true faith to my country and Constitution.
  - s1artibartfast 5y ago
    Thanks for the response. While I don't agree that stocks and companies are counter to the public good, I understand how someone could feel this way. How do you personally invest and save if you avoid stocks?
barrenko 5y ago
Really, all of our political problems were more or less solved in ancient Rome.

fspacef 5y ago

This really makes common sense, why should lawmakers who have access to privileged information be allowed to execute stock trades. This only beuilds more resentment from the common man.

misiti3780 5y ago

I think the easiest solution is they should not be allow to buy individual stocks + options. Only indexes.

BirdPlusPlus 5y ago

Federal lawmakers aren't capable of NOT insider trading.

naveen99 5y ago

If I were supreme, I’d make all publicly traded trades public. Publish the identities of the trading counterparties along with the volume and price of the trade. I mean these markets are supposed to be public. You get better price discovery and less stealing from insider information… to know your counterparty is like rule number 1 in any business. Somehow in the ambiguously public, public markets, it’s private.

ArchStanton 5y ago

I have no problem with lawmakers making stock trades, but you can certainly argue that it is immediately made public. To be fair, there are probably edge conditions where a congressman has direct control over the financial realities of a publicly related company. I think the more heinous cases are lawmakers becoming lobbyists and (worse) lawmakers making huge bucks on public speaking which is a very thinly veiled bit of influence peddling. Believe me, the Clintons didn't get paid $153M to give short speeches. (https://www.cnn.com/2016/02/05/politics/hillary-clinton-bill-clinton-paid-speeches/index.html https://www.cnn.com/2016/02/05/politics/hillary-clinton-bill... ) I suppose when you get down to it, as government becomes more powerful it becomes more gameable.

bencollier49 5y ago
Came here to say the same thing. Trades by lawmakers should be instantaneously public.
- 93po 5y ago
  They'd just use shell corporations or friends/family in that case. The only people who would still trade under their name have nothing to hide to begin with and aren't the problem we're trying to solve.
  - webinvest 5y ago
    Don’t underestimate the power of default options

bjourne 5y ago

When discussing doping in sports people are generally receptive to the following argument: Athletes will do everything they can to dope because the benefits far outweighs the drawbacks. It is probable that many of the world's top athletes are doped. However, when discussing financial trading people are generally not receptive to the following argument: Stock traders will do everything they can to exploit inside information because the benefits far outweighs the drawbacks. It is probable that those who consistently outperform indexes exploit inside information. Why the discrepancy? Do people believe that successful stock traders in general are more honest and law-abiding than top athletes?

t-3 5y ago
> Why the discrepancy? Do people believe that successful stock traders in general are more honest and law-abiding than top athletes? It's probably more to due with your audience than "people in general". The type of people who can/will discuss financial markets tend to be invested in financial markets, and thus do not want to understand. If you have your sense of self-worth (in more ways than one), tied up in the numbers in your brokerage account, would you readily accept the idea that your heros and "investment mentors" are cheats and liars? How many amateur athletes would believe that professionals are all doping relative the broader population that is not so invested in sports?
s1artibartfast 5y ago
My understanding is that doping in sports is largely a solved problem at this point. I believe I have to submit biological samples witch are preserved indefinitely. Provides a significant barrier because future Technologies 10 allow retrospective analysis. Sure there are tons of athletes that modify and enhance their performance up to the Limit of acceptability, but I think there are the Wild West of doping is a thing of the past.

gabella 5y ago

As for me, shares are very convenient for a certain category of the population. And also profitable.

brandonmenc 5y ago

Good luck with that. This will be impossible to enforce. The wealthiest lawmakers will get around it, and the middle class lawmakers will be saddled with the burden of shuffling their entire investment portfolio around. It's unreasonable in practice. (imo, everything is "insider trading" if you squint hard enough. Another losing battle.) Impose term limits or stfu.

antattack 5y ago

Just when was it that many thought it was a good idea?

javier10e6 5y ago

It might read unrelated yet, term limits is the only concrete way to limit the damage of a corrupt lawmaker.

jedberg 5y ago

When an insider wants to sell stock, they are required to file a form announcing their intentions ahead of time, giving the market a chance to front-run them and/or react to their sales. Since Congresspeople are the ultimate insiders, they should be required to file the same forms, so that the American public can analyze and front-run them. Not just Congresspeople, but anyone who works in the Government with access to secret information, especially secret financial reports.

AlbertCory 5y ago

This is strictly about the headline, not the article. Lawmakers should, indeed, be required to put all their holdings into a blind trust for the duration of their service, at least. "Many believe" is the sort of garbage phrase that "journalists" and their headline writers use nowadays. It's purely a way of laundering your personal beliefs. Who are these "many"? Just the friends of the journalist?

JasonFruit 5y ago

I'd be interested to know how often Congressional stock trades have been used to reason about classified information, i.e. a number of senators invest in a certain stock, implying that a suspected but classified decision went a certain way.

literallyaduck 5y ago

Congress should be sequestered while in office and all financial activities frozen. If they want to trade again they can start a year after they leave office and get out of sequestration. No aids, no spouses, and every moment recorded for the public record.

imglorp 5y ago

How about all branches, judicial, executive, and legislative? Emoluments and conflict of interest seem equally harmful in all.

CrazyPyroLinux 5y ago

Instead of doing away with stock trades, the better approach would be to do away with "lawmakers."

mrtweetyhack 5y ago

at least that under-the-table stuff still works

kristjansson 5y ago

Of all the ways for a congressperson to transform her access and power into personal wealth, trading on inside information is close to socially optimal. It’s basically victimless (unlike graft), doesn’t necessarily[1] distort incentives toward good policy or law (unlike accepting bribes), and doesn’t impose a direct cost on taxpayers (like increasing salaries). If we can’t foreclose all of the avenues from power and access to wealth, we should let them have the least harmful one and clamp down on the others. Hell, we should give them a million on margin and at the start of their term. Note that the simple solution of ‘less venal congresspeople’ is outside feasible region. [1] obviously concentrated positions could distort policy choices, but they could be prevented from holding more than x% in one name for more than y quarters of disclosure.

audiometry 5y ago

It’s so gross that they do this. When I worked at banks on Wall Street, they all had onerous approval processes for employees to trade. Pre-approvals that lasted for one day only etc. All these rules attempting to prevent insider trading. Amazing that these scummy Fed employees and congressmen don’t have any encumberence like that. So gross.

createunderrate 5y ago

I have always thought politicians should take a vow of average wealth. You don't get more money unless we do, too.

morpheos137 5y ago

If you write good law you should be able to reap some amount of the financial rewards.