7 ms·

Outright banning trades will only obscure congressional trading (shell corps, friends/family, etc.) I would prefer a public registry listing all congressional

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.
  - arc-in-space 5y ago
    Indeed. The prevailing mood in this thread is a sort of mutual understanding that insider trading is obviously bad, and the only point worth debating is how to regulate it in this particular instance. Instead, I feel like we should back up a couple steps and seriously investigate the assumption that insider trading is at all detrimental. I fear we're still deep in the "somebody, somewhere, might be making a profit" bog.
  - pirate787 5y ago
    Germany has more permissive insider trading laws, and public participation in German capital markets is much lower. Insider trading laws inspire confidence in the market for non-insiders, the average public.
    - sentinel 5y ago
      Permissive insider trading laws and public participation in German capital markets may not necessarily be correlated. There can be other reasons why Germans choose not to participate. But, I do agree that (at least) an attempt to make insider trades more transparent does help inspires confidence.
strangemonad 5y ago
It should follow similar rules to other professions with privileged information like most accountants need to follow
flatiron 5y ago
They should be allowed to go in something like an S&P 500 index fund. But personally I have blackout dates trading my own company stock why don’t they have any restrictions?
- nearbuy 5y ago
  Investing in an index fund might even incentivize them to ensure the economy as a whole does well.
  - dtech 5y ago
    Incentivizing that large public companies do well, not quite the same.
    - cpeterso 5y ago
      Then make it a total market index fund with small, mid-size, and large companies.
      - tehjoker 5y ago
        The family owned restaurant down the block is definitely listed on the stock exchange.
      - dmckeon 5y ago
        Make it 10 to 20 blind funds, each with one very broad theoretical goal: “if the country does well, the fund does well” and with different managers, management styles, investment strategies. The funds do not disclose their specific holdings publicly, but do report them to regulators. Elected officials transfer all their equity assets into one or more funds before taking office and get shares in the fund. When they leave office, they can receive the current cash value of their shares, without any capital gains tax, or can get their original contributions back, if the fund still holds them. If the country did well, the fund did well, and so do those who were elected. Optionally, make this available to all government employees at the federal, state, and local levels, and generally to individual investors.
user3939382 5y ago
We already have a regulatory framework for managing those issues that was built to deal with insider trading.
- edgyquant 5y ago
  For obvious reasons we can’t allow the executive to persecute the legislature with something as difficult to prove as insider trading. It could be used by a tyrant to push through legislation in theory.

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.
- arc-in-space 5y ago
  Indeed. The prevailing mood in this thread is a sort of mutual understanding that insider trading is obviously bad, and the only point worth debating is how to regulate it in this particular instance. Instead, I feel like we should back up a couple steps and seriously investigate the assumption that insider trading is at all detrimental. I fear we're still deep in the "somebody, somewhere, might be making a profit" bog.
- pirate787 5y ago
  Germany has more permissive insider trading laws, and public participation in German capital markets is much lower. Insider trading laws inspire confidence in the market for non-insiders, the average public.
  - sentinel 5y ago
    Permissive insider trading laws and public participation in German capital markets may not necessarily be correlated. There can be other reasons why Germans choose not to participate. But, I do agree that (at least) an attempt to make insider trades more transparent does help inspires confidence.

strangemonad 5y ago

It should follow similar rules to other professions with privileged information like most accountants need to follow

flatiron 5y ago

They should be allowed to go in something like an S&P 500 index fund. But personally I have blackout dates trading my own company stock why don’t they have any restrictions?

nearbuy 5y ago
Investing in an index fund might even incentivize them to ensure the economy as a whole does well.
- dtech 5y ago
  Incentivizing that large public companies do well, not quite the same.
  - cpeterso 5y ago
    Then make it a total market index fund with small, mid-size, and large companies.
    - tehjoker 5y ago
      The family owned restaurant down the block is definitely listed on the stock exchange.
    - dmckeon 5y ago
      Make it 10 to 20 blind funds, each with one very broad theoretical goal: “if the country does well, the fund does well” and with different managers, management styles, investment strategies. The funds do not disclose their specific holdings publicly, but do report them to regulators. Elected officials transfer all their equity assets into one or more funds before taking office and get shares in the fund. When they leave office, they can receive the current cash value of their shares, without any capital gains tax, or can get their original contributions back, if the fund still holds them. If the country did well, the fund did well, and so do those who were elected. Optionally, make this available to all government employees at the federal, state, and local levels, and generally to individual investors.

user3939382 5y ago

We already have a regulatory framework for managing those issues that was built to deal with insider trading.

edgyquant 5y ago
For obvious reasons we can’t allow the executive to persecute the legislature with something as difficult to prove as insider trading. It could be used by a tyrant to push through legislation in theory.