3 ms·

Shouldn't be that hard to solve, IMO. Congress members should be required to rebalance their portfolio into index funds for the duration of their term. Family

Shouldn't be that hard to solve, IMO. Congress members should be required to rebalance their portfolio into index funds for the duration of their term. Family members should be subject to insider trading regulation, and the congress member considered an insider.

lotsofpulp 5y ago
Define family member. Also, everyone in the US is already subject to insider trading regulations.
- elliekelly 5y ago
  This is a solved problem. Employees of RIAs have the same trading restrictions. The SEC's adopting release[1] of the RIA Code of Ethics requirements gives a pretty good overview of how it works in the "Personal Securities Trading" section. Each RIA firm has their own policy implementing the rule but here's an example of how family is typically defined from a random firm's policy I found via DDG: > “Immediate Family” generally means any relative by blood or marriage living in the individual’s household, any domestic partner or other minor child residing in his or her household and, whether or not living in the individual’s household, any other relative with respect to whose investments the individual has influence or control. [1]https://www.sec.gov/rules/final/ia-2256.htm#P72_13634 https://www.sec.gov/rules/final/ia-2256.htm#P72_13634
  - mitigating 5y ago
    If that's the case then I would just tell my friend insider information that helps him then wait for him to tell me info as well.
    - ClumsyPilot 5y ago
      And I can steal my neighbour's bike from the common bike room, both could land you in jail if it's ever discovered. This is not some kind lf 'goctcha, i am so smart', all accountants, bank employees and traders are subject to these industry-standard restrictions.
  - wayoutthere 5y ago
    I was bound by this when working for a Big 4 professional services firm — it was ludicrous that I had far more restrictions placed upon myself than congress did for just being an employee of a firm that did audit and attest work (which was not work I participated in). At a bare minimum we should make them follow the rules that anyone else with access to manipulate financial markets has to follow.
- maxk42 5y ago
  Not quite true. Congress has been explicitly exempted from insider trading regulations.
  - lotsofpulp 5y ago
    As far as I know, this was rectified in 2012 (or at least made explicit, some claim Congress was never exempt). https://en.wikipedia.org/wiki/STOCK_Act https://en.wikipedia.org/wiki/STOCK_Act https://www.wsj.com/articles/SB10001424052970203711104577199113513037068 https://www.wsj.com/articles/SB10001424052970203711104577199... https://www.congressionalinstitute.org/2018/08/16/can-members-of-congress-engage-in-insider-trading/ https://www.congressionalinstitute.org/2018/08/16/can-member...
ludamad 5y ago
Would you consider leverage restrictions? A well placed SPY call option can still capture plenty of inside information at a congress level
danuker 5y ago
That would still favor the companies in index funds (i.e. large ones who could go through an IPO) as opposed to small companies or self-employed people.
msandford 5y ago
My feeling is that they should be able to bring any of their previous positions or investment into their terms, but not exit or otherwise change them except into index funds. So let's say that prior to being elected someone's heavy into telecoms for some reason. Keep the positions! Keep them as long as you want. If you want to sell, go ahead. If you want to buy back in? Sure, but index funds only. There's still some room for abuse there but it vastly reduces the opportunity for abuse.
ModernMech 5y ago
> Shouldn't be that hard to solve You’ve given us a proposal, but how do you implement it? Surely a proposal doesn’t solve anything, you have to implement it to actually solve something. So how do you implement your proposal? Not so easy… first you need a bill to pass. It has to be put to a vote by Nancy Pelosi, who said she won’t support your solution. So you need to get rid of her: either she retires or loses reelection (unlikely) or you get a Republican speaker. Would a Republican speaker put your bill to a vote? Certainly not after Nancy Pelosi cited “free market capitalism” as a reason for resisting restrictions. The Republican speaker can’t be portrayed as being to the left of Pelosi, who has been interchangeably labeled a “liberal communist socialist democrat leftist”. And then there is the vote itself. Even if you get it to a vote, you are asking a group of people to take away a benefit to themselves. They are literally voting on whether to make themselves poorer. Is that going to be an easy vote to whip? Not likely. And then if it does pass, then you have enforcement issues. There was just an issue of Congressman Collins getting convicted of insider trading for giving tips to his son. He was caught on tape. He pleaded guilty. 2 years he was sentenced. He should be serving his sentence right now. Instead he is a free man, the beneficiary of a Presidential Pardon for his crimes. So even if you pass you pass the hurdle of the speaker; even if you pass the hurdle of the vote; even if you enforce the law on the books through the criminal justice system with courts, judges, evidence, and a sentence; EVEN THEN the powers that be will find a way to remain unconstrained by your solution. “Laws are for thee, not for me.” So yea, we can throw out “easy solutions” all day that are really just proposals that will do nothing to solve this problem. Because this is a problem of the powerful self-dealing, and you don’t solve that through the system they use to deal themselves.
- teeray 5y ago
  The more general problem is: “how do you pass a law that benefits society but is a detriment to its elected representatives?” It’s a meta question too, because whatever mechanisms we come up with would be, by extension, beneficial to society and detrimental to politicians.
Tiktaalik 5y ago
It's a solved problem in Canada. Everything goes into a Blind Trust. https://www.cbc.ca/news/canada/prince-edward-island/pei-blind-trust-cabinet-conflict-1.5136542 https://www.cbc.ca/news/canada/prince-edward-island/pei-blin...

lotsofpulp 5y ago

Define family member. Also, everyone in the US is already subject to insider trading regulations.

elliekelly 5y ago
This is a solved problem. Employees of RIAs have the same trading restrictions. The SEC's adopting release[1] of the RIA Code of Ethics requirements gives a pretty good overview of how it works in the "Personal Securities Trading" section. Each RIA firm has their own policy implementing the rule but here's an example of how family is typically defined from a random firm's policy I found via DDG: > “Immediate Family” generally means any relative by blood or marriage living in the individual’s household, any domestic partner or other minor child residing in his or her household and, whether or not living in the individual’s household, any other relative with respect to whose investments the individual has influence or control. [1]https://www.sec.gov/rules/final/ia-2256.htm#P72_13634 https://www.sec.gov/rules/final/ia-2256.htm#P72_13634
- mitigating 5y ago
  If that's the case then I would just tell my friend insider information that helps him then wait for him to tell me info as well.
  - ClumsyPilot 5y ago
    And I can steal my neighbour's bike from the common bike room, both could land you in jail if it's ever discovered. This is not some kind lf 'goctcha, i am so smart', all accountants, bank employees and traders are subject to these industry-standard restrictions.
- wayoutthere 5y ago
  I was bound by this when working for a Big 4 professional services firm — it was ludicrous that I had far more restrictions placed upon myself than congress did for just being an employee of a firm that did audit and attest work (which was not work I participated in). At a bare minimum we should make them follow the rules that anyone else with access to manipulate financial markets has to follow.
maxk42 5y ago
Not quite true. Congress has been explicitly exempted from insider trading regulations.
- lotsofpulp 5y ago
  As far as I know, this was rectified in 2012 (or at least made explicit, some claim Congress was never exempt). https://en.wikipedia.org/wiki/STOCK_Act https://en.wikipedia.org/wiki/STOCK_Act https://www.wsj.com/articles/SB10001424052970203711104577199113513037068 https://www.wsj.com/articles/SB10001424052970203711104577199... https://www.congressionalinstitute.org/2018/08/16/can-members-of-congress-engage-in-insider-trading/ https://www.congressionalinstitute.org/2018/08/16/can-member...

ludamad 5y ago

Would you consider leverage restrictions? A well placed SPY call option can still capture plenty of inside information at a congress level

danuker 5y ago

That would still favor the companies in index funds (i.e. large ones who could go through an IPO) as opposed to small companies or self-employed people.

msandford 5y ago

My feeling is that they should be able to bring any of their previous positions or investment into their terms, but not exit or otherwise change them except into index funds. So let's say that prior to being elected someone's heavy into telecoms for some reason. Keep the positions! Keep them as long as you want. If you want to sell, go ahead. If you want to buy back in? Sure, but index funds only. There's still some room for abuse there but it vastly reduces the opportunity for abuse.

ModernMech 5y ago

> Shouldn't be that hard to solve You’ve given us a proposal, but how do you implement it? Surely a proposal doesn’t solve anything, you have to implement it to actually solve something. So how do you implement your proposal? Not so easy… first you need a bill to pass. It has to be put to a vote by Nancy Pelosi, who said she won’t support your solution. So you need to get rid of her: either she retires or loses reelection (unlikely) or you get a Republican speaker. Would a Republican speaker put your bill to a vote? Certainly not after Nancy Pelosi cited “free market capitalism” as a reason for resisting restrictions. The Republican speaker can’t be portrayed as being to the left of Pelosi, who has been interchangeably labeled a “liberal communist socialist democrat leftist”. And then there is the vote itself. Even if you get it to a vote, you are asking a group of people to take away a benefit to themselves. They are literally voting on whether to make themselves poorer. Is that going to be an easy vote to whip? Not likely. And then if it does pass, then you have enforcement issues. There was just an issue of Congressman Collins getting convicted of insider trading for giving tips to his son. He was caught on tape. He pleaded guilty. 2 years he was sentenced. He should be serving his sentence right now. Instead he is a free man, the beneficiary of a Presidential Pardon for his crimes. So even if you pass you pass the hurdle of the speaker; even if you pass the hurdle of the vote; even if you enforce the law on the books through the criminal justice system with courts, judges, evidence, and a sentence; EVEN THEN the powers that be will find a way to remain unconstrained by your solution. “Laws are for thee, not for me.” So yea, we can throw out “easy solutions” all day that are really just proposals that will do nothing to solve this problem. Because this is a problem of the powerful self-dealing, and you don’t solve that through the system they use to deal themselves.

teeray 5y ago
The more general problem is: “how do you pass a law that benefits society but is a detriment to its elected representatives?” It’s a meta question too, because whatever mechanisms we come up with would be, by extension, beneficial to society and detrimental to politicians.

Tiktaalik 5y ago

It's a solved problem in Canada. Everything goes into a Blind Trust. https://www.cbc.ca/news/canada/prince-edward-island/pei-blind-trust-cabinet-conflict-1.5136542 https://www.cbc.ca/news/canada/prince-edward-island/pei-blin...