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Congress Needs to Stop Day Trading, Says Sen. Mark Warner
- Bostonian 5y agoAs I've said before, publish the trades of politicians and Fed officials online every evening. If they make hundreds of millions trading on information the public is unaware of, disseminate that information quickly. Politicians say things they know are untrue, but they will trade in what they perceive to be their interests. "Some of the most egregious stock trading in Congress occurred when several Senators dumped large volumes of stock in Winter 2020, right after Congress was briefed on the magnitude of the Covid threat. Sen. Kelly Loeffler sold millions in stock. Her fellow Georgia Sen. David Purdue made a windfall by dumping and buying back stock. Sen. Richard Burr offloaded more than $1.6 million in stock ahead of the market crash (and then made a suspicious call to his brother-in-law, who promptly called a broker)."
- rolobio 5y agoSounds great. Could we also start some sort of Index fund using those trades? Congress seems to have some fantastic returns I would like to tap into!
- sputknick 5y agoNot an index fund, but you can programmatically get access to their disclosed trades and create your own trading bot from there. I think this disclosures are a month or so after the fact. https://api.quiverquant.com/docs/ https://api.quiverquant.com/docs/
- rolobio 5y agoNice info. A days lag would be better, or instant! I think a month would give them plenty of time to dodge the crash. Like happened in 2020.
- adoxyz 5y agoThey're required to disclose the trades, but usually have like 2 months to do it and the fines for not disclosing or improperly disclosing are minimal to none. It's a joke. They should be held accountable like most people that have a conflict of interest. I work for a publicly traded company, and even though I don't have anything to do with the financial side of things, I'm forbidden from trading for most of the year to avoid any potential conflict of interest.
- Teknoman117 5y agoI remember a thread on this a few months back, and the problem is that most of these trades happen at the small windows in time where members of congress have information the public doesn't. While trades by members of congress have to be made public, there is a delay. If you buy/sell after the delay (up to 45 days), the performance isn't really going to correlate with what they're getting.
- csee 5y agoSide effect would be that this would help them make even more money, due to lots of money following their trades after they have entered the position, and it would create pump and dump incentives.
- melony 5y agoWhy online in the evening? Do it in real time with an official federal FIX stream.
- filoleg 5y agoImo real time is not enough, but it is a solid bare minimum requirement. If private executives have to schedule and declare their company equity trades months and months ahead of time, why do we let the government officials off the hook with just real time? I am not proposing the same “months and months ahead” rules for politicians, because for private executives that restriction applies only to the equity of their own companies (while for congress it would be for all companies). But what about a day ahead? I think that’s reasonable to make government officials to declare their trade a day ahead. After all, unless it is some specifically-timed trade based on insider info, why would it matter? It is just a single day. But i would also be ok with “declared a day ahead to SEC, with the trade info being automatically released to the public the second it happens” (basically, same as real-time, but with an extra safeguard). Mostly proposing this one, because I am concerned that knowing their trades ahead of time publicly might introduce unwanted side effects.
- adoxyz 5y agoI'd be ok with them having to declare it months ahead of time, or better yet, banning individual stock ownership for members of congress who have the most privileged information.
- TheDong 5y ago> because I am concerned that knowing their trades ahead of time publicly might introduce unwanted side effects. Unwanted side effects like them not buying small volatile stocks that are perfect for insider trading, and instead buying large index funds that are difficult to manipulate? Frankly, anyone who's buying small named stocks that the market can move is either 1) a gambling addict, 2) a professional daytrader, 3) an idiot, 4) breaking the law, or 5) all of the above. I would personally prefer that we do not hire day-traders to represent us in government (or if we do, that they stop daytrading for the duration), so I'm fine if this just has the side-effect of no congress-people daytrading.
- Supermancho 5y ago> As I've said before, publish the trades of politicians and Fed officials online every evening Just like banning trading, this will be circumvented by family/business proxies doing the trades. Including potential family proxies, in the public accounting, would probably be the most effective move to motivate ethical behavior. At least put some risk in the form of the relationship to the business partners, given the vast amounts of money flowing.
- TheDong 5y agoI've got a slight improvement to your idea. Instead of publishing the trades after, or as they make them, instead publish them before they make them. Require any congress-person who wishes to trade a stock to write a plan saying "I will buy/sell roughly this many dollars worth of these shares on this date", and require the plan to be published a week before the trade is executed. We already require CEOs and company officers at large companies to do similar plans (though they do not have to publish them publicly ahead of time), and requiring our government officials to act as sorta officers of the entire economy seems kinda fair. They have material information on many different things. Making them decide on trades weeks or months in advance seems like it should prevent day trading, while still letting them invest in reasonable portfolios if they want.
- Bostonian 5y agoThe difference between our views is that I want government insiders to trade on their information, as long as their trades are soon publicized, so that the information is quickly incorporated into market prices. Slowing down their trading by making them wait a week interferes with that.
- gamerDude 5y agoWhen I worked in a financial trading firm, I had to submit trades that I would make 3 days before hand and then get them approved to make sure I had no relationship to that stock. The same seems fine with me for any government official. Make a trade request, gets published publicly, a legal body reviews and allows or denies.
- panny 5y ago>As I've said before, publish the trades of politicians and Fed officials online every evening. If they make hundreds of millions trading on information the public is unaware of, disseminate that information quickly. Then Senator Jackass dumps stock on Monday to crash it and picks it back up for a song on Tuesday.
- dudus 5y agoWouldn't that be a wash trade?
- revscat 5y agoWhat benefit would that serve? We already know this is happening. So we would know it... more?
- ramesh31 5y agoAwkward title. It implies congress is considering a ban on retail day trading.
- kupopuffs 5y agohow? It's one senator saying this....
- kej 5y agoThe headline can be interpreted as "Members of Congress should not themselves be day trading" or as "Congress should enact legislation to prevent everyone from day trading". The article is clearly the first one, but the headline could be read either way.
- tata71 5y agoInteresting interpretation....never in a thousand years would have read it this way. I take it you don't trade/follow financial markets?
- zever 5y agoIt seems obvious after I caught my mistake, but I too originally misread it in this away. Not sure why you're being downvoted.
- okamiueru 5y agoI wish every time someone complained about a title, they included the title at the time. HN moderators are very quick to correct issues, and it leaves the comment and the rest wondering "what is wrong with it?"
- zw123456 5y agoCEO's and officers of corporations have to disclose their trades of their company stock. It is only fair that the public officials making the laws that govern the operations of said corporations should have to disclose all their stock activities as well, since almost any law they pass could potentially impact almost any company.
- gkoberger 5y agoThis is already the law. Since the "Stop Trading on Congressional Knowledge Act of 2012", they already have to disclose any stock trades made by themselves, a spouse or a dependent. Because this hasn't fixed the issue, and most don't seem to have any shame, these recent laws (originally coming from Ds but Rs have their own version) prevent them from trading individual stocks while in office.
- animal_spirits 5y agoI think the problem with this act is AFAIK it states they have to report the trades 45 days AFTER they make them. Not before they make them. So they all just wait until 45 days later when it’s not relevant anymore. New news cycle, people forget
- notacoward 5y agoAFAICT they wait even longer than that, and suffer no consequences. For example, Rand Paul waited 16 months to disclose his wife's trades in Gilead Sciences. https://www.washingtonpost.com/politics/2021/08/11/rand-paul-gilead-stock/ https://www.washingtonpost.com/politics/2021/08/11/rand-paul... RP is a particularly grotesque piece of work (not only in this regard), but he's far from alone. Staffers are subject to the same rules, and at least 182 of them have done the same thing. https://www.businessinsider.com/congress-staff-violated-stock-act-conflicts-of-interest-possible-2021-12 https://www.businessinsider.com/congress-staff-violated-stoc...
- deleted 5y ago[deleted]
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- revscat 5y agoWe will see a black hole evaporate via Hawking radiation before a bill such as this becomes law. The United States Senate is the body representing the capitalists/landed gentry/aristocracy/etc., and from my amateur reading of US history it always has been. The House is only slightly better. There may be politically powerful voices which speak out on issues such as these, but only briefly. Tomorrow will be a new crisis, or celebrity death, or something which takes attention away. And because the politicians voicing support for change are in the minority, and support for their efforts non-existent, then there is no momentum to push it forward beyond the crisis of the week. This has been true for as long as I can remember. I have never seen evidence, current or historical, that gives evidence otherwise. Instead, voters are blamed, blamed for a system they have little to no power to affect in any significant way.
- throwaway2331 5y agoSeems like the only way to enact "real" change is to convince the propertied class that such changes are within their interests (and have them pull the strings in a mutually-beneficial way). I cannot think of anything the lower classes can offer that would be of any substance -- only things they can take away by force to impel the other to meet "eye to eye."
- redanddead 5y agoWhy not leverage the power of technology?
- newbie789 5y ago
- wmeredith 5y ago> We will see a black hole evaporate via Hawking radiation before a bill such as this becomes law. This is the content I'm here for. Well done LOL
- MomoXenosaga 5y agoAnd the best HN can come up with is throwing more money at the problem making anyone in public office automatically a part of the gentry.
- chiefalchemist 5y agoIf you've ever wondered why anyone would run for Congress given the pay, this is your answer. What's amazing is how many of them will shamelessly promote the idea of corruption in other countries, and then day trade and grasp their hypeocricy.
- notacoward 5y agoThat's absolutely correct. It's far from the only way they profit from their offices, but it's certainly one way. It's shameful that you were downvoted for making the point.
- chiefalchemist 5y agoI stopped worrying about down votes and HN dysfunction a while ago. That aside, such information is a form of currency, and done right...untraceable. A term or two in office, is temporary. The involvement in this currency is forever.
- faangiq 5y agoJust pay these people 50 mil a year and tell them to go away.
- sumedh 5y agoWhy 50 million?
- m_ke 5y agoOnly way we'll ever get rid of Pelosi.
- aerostable_slug 5y agoI can't recall who said it, but the gist of the quote was: "If you want to eliminate earnings inequality in the United States, give every citizen real-time access to Nancy Pelosi's trades." According to the now-Cancelled Twitter account (would that have happened if she was a Republican?) dedicated to her financial shenanigans, her portfolio has outperformed Bitcoin. Something is deeply, deeply wrong here.
- helloworld11 5y agoIs there no other source for information on her financial activities?
- aerostable_slug 5y agoNothing as detailed as the Twitter account, unfortunately — but I'm still looking! Decent article: https://www.jacobinmag.com/2021/12/house-speaker-paul-stocks-insider-trading-wealth https://www.jacobinmag.com/2021/12/house-speaker-paul-stocks... Interesting (though they have 30 days to report their activities): https://www.quiverquant.com/sources/senatetrading https://www.quiverquant.com/sources/senatetrading https://www.quiverquant.com/sources/housetrading https://www.quiverquant.com/sources/housetrading
- xt00 5y agoIt has to also include the typical provisions for insider trading like "telling others material information related to stocks / companies etc". I tend to like the idea people are proposing of requiring the information to be disclosed in real-time when the trade is made (also not like "at the closing bell" BS that I'm sure people would push for..). Like it would be awesome to see people making trades 10 mins after a briefing and going, huh.. ok cool, so looks like Lockheed won the contract... :-)
- ISL 5y agoMembers of Congress make ~$174k/yr. [1] It will be an unpopular opinion, but I believe that we should pay better (and demand better) for a job with that much responsibility. Otherwise, a congressperson will be forever tempted to align their incentives with service to causes other than their electorate. I'm fairly certain we should be paying our elected officials at least as much as our football coaches. [1] https://www.senate.gov/artandhistory/history/common/briefing/senate_salaries.htm https://www.senate.gov/artandhistory/history/common/briefing...
- Handytinge 5y agoIs that not a good wage? That's at arouns 5x median/3x average American wage from the numbers I found online and puts them in the top 6% of earners in the country based on a random calculator I found[1]. I accept there's probably some variance here, but even if they're in the top 10% of Americans, is that not sufficient? What percentage do you think they should be in? [1] https://dqydj.com/income-percentile-calculator/ https://dqydj.com/income-percentile-calculator/
- jakelazaroff 5y agoLet's say we increased that salary by 10x. Why would they not simply continue their lucrative conflict of interest side gig on top of the lucrative salary they make? The potential gains from trading on insider information are greater if you have more money to invest!
- sodality2 5y agoThere's more at risk to be lost
- Tenoke 5y agoFor what is worth, if they get even less compensation and more limitations it might become even less lucrative for capable individuals which I'm honestly not sure if it won't make things even worse as it leads to both less misaligned incentives but also worse quality talent. You can't get anywhere near a top-notch CEO for their salaries, why would you expect to get a top-notch Congressman?
- iamleppert 5y agoHow is it acceptable for them to engage in these activities while on the job? It should be illegal based upon their job duties. During office hours, and while at the office, like everyone else, they should be required to carry out their job duties and not engage in personal or outside activities. Trading stocks and the like has nothing to do with their job and should not be done while at your job. If a congress person is caught doing anything else besides their job, they should be fired immediately for cause. We need to put the public service back in public service.
- deleted 5y ago[deleted]
- reidjs 5y agoAre you 100% focused all the time when you're at work? I think it's a bit unrealistic to expect that kind of focus from anyone at any job. If they're getting their work done, I don't see the harm in trading stocks ASSUMING they are playing by the rules, i.e., not insider trading.
- iamleppert 5y agoI think there’s a difference between reading the news or social media occasionally at work and doing something like trading stocks. It falls into the realm of work. I know some people trade stocks for leisure but the vast majority do it to make money. Is it right to work another job for profit at your employer or while your employer is expecting you to be doing work on behalf of them? According to my moral compass, that’s a no. I would be pretty upset if I found one of my employees trading stocks while they were supposed to be working. Especially if my approval of them was low, which is the current situation with many government officials right now. If there was agreement on both sides before taking a job, that would be different but I find that hard to believe before taking a job someone would admit to that, and that’s a sign they know it’s wrong. They have a lot of nerve thinking this is acceptable behavior when the country is in the middle of a crisis and has a lot of problems to solve.
- ShamelessC 5y ago
- andrewclunn 5y agoInsider trading for EVERYONE! The market is already part scam part gambling. Let's give private business a shot by making publicly traded ones little more than a pyramid scheme.
- sslayer 5y agoDoes anyone actually believe this is going to accomplish anything meaningful? I'm sure there is thousands of more loopholes to get around it. We should be focused on accountability to the American people, not just the rich.
- UIUC_06 5y agoAll the discussion about how much Senators and Representatives should be paid and whether it leads to bribery misses the most important moral point, which is: They are in a position to influence stocks, and hence must be barred from owning them, other than in a blind trust. It's the same moral principle as "Judges must recuse themselves from cases in which they have a financial interest." We want them to vote on regulating Big Tech based on their understanding of the issues and their constituents' desires, not on their holdings of Big Tech stocks. Yes, I know that's naïve and there are campaign contributions to think of, but that's a separate topic of law. Discussing whether they get "enough" to live on also misses the fact that they're not doing it for living expenses -- they're doing it to get rich.
- q1w2 5y agoI have trouble with the escalation of demands being made on social media. Initially the titles talked about banning "insider trading", despite them not legally being insiders (which is a very specific legal term which refers to company employees/agents which specific non-public corporate information). The the titles talk about banning "day-trading", which is trading in-out of stocks multiple times per day. They are almost certainly NOT doing that. ...now you're saying they cannot even have any stock ownership - which would imply they cannot have a 401k or 529 for their kids (because those invest in funds) - or even a vanilla money-market savings account at any bank. Taking this logic further, they shouldn't be allowed to own any financial assets - bonds, real estate, etc... These arguments have lost touch with reality.
- UIUC_06 5y agoFirst of all, you're right about the title. The article is not about day trading, which confused me at first too. However, "insider" is often construed broadly as "possessing material, non-public information." For example, if you work at Google and you realize the next earnings are bad and you call your brother-in-law, who sells short, he can be prosecuted for violating insider trading laws. I think. Not just you. Now as to "you're saying they cannot even have any stock ownership" -- I didn't say that, I said "blind trust." This is a legal vehicle that's been used for public officials for generations. It means they can't influence it and they don't know how it's doing.