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Senators strike bipartisan deal for ban on stock trading by members of Congress
- jqpabc123 2y agoAny effort by Congress to police itself is really just political theater for consumption by the unsuspecting voter. How to sidestep this ban? Setup an anonymous trust or holding company in Wyoming or overseas.
- giantg2 2y agoI thought there was a recent law in the past few years that required any entity holding securities to provide entity ownership data to the SEC.
- jqpabc123 2y agoThe entity in this case won't necessarily be a typical securities "holding" company. Legally, it may be the owner of the securities. It's possible to make it very difficult to prove who ultimately controls the company.
- giantg2 2y agoSure, people can lie and commit fraud regardless of the law. The corporate transparency act requires certain reporting of "beneficial ownership".
- jqpabc123 2y agoThe corporate transparency act doesn't apply outside the country. Anyone in the world can legally buy US securities. Obscuring ownership and control can be done perfectly legal.
- giantg2 2y ago"Anyone in the world can legally buy US securities." Assuming you aren't sanctioned. "Obscuring ownership and control can be done perfectly legal." Exception the tax fraud part...
- 0cf8612b2e1e 2y agoI am curious why it would work this time. The STOCK act was written a decade ago. https://en.m.wikipedia.org/wiki/STOCK_Act https://en.m.wikipedia.org/wiki/STOCK_Act
- delecti 2y agoBecause this will remove intent and knowledge from consideration. Under the STOCK act, you have to prove they're trading based on non-public information. Under the new bill, they just can't trade stocks, period. Any trading is immediately an offense.
- tines 2y agoI don't know why anyone is talking about insider trading. I don't give a shit if the congresspeople do insider trading. What I care about is that if congresspeople can trade at all, they have a conflict of interest in doing their legislative duties. They are incentivized to pass laws that will benefit corporations and make the stock market rise. That's what is unacceptable about Congress trading. Banning trading totally is the only thing that matters.
- greentxt 2y agoOr speculate on real estate or non-covered securities of which I am sure there are many. Or buy crypto, or Art, or ...
- viraptor 2y agoAll of those are fine. It's not to prevent them from investing, but to prevent some form of insider trading (does that name still apply for people who know about policy / funding changes ahead of time?)
- dgfitz 2y agoThe headline says "bipartisan deal for BAN on stock trading" doesn't it? Inside trading is already notionally illegal, isn't it? Why would this law be trying to re-make insider trading illegal?
- viraptor 2y agoBecause we have a good idea of many people abusing the position, just haven't caught anyone red handed. It's a bit like "why have traffic rules that differ for specific places and people if we already made killing others illegal?".
- dgfitz 2y agoWhat I meant was, insider trading is already illegal. This is allegedly going to make trading itself illegal. What was your point about insider trading?
- toast0 2y agoI wouldn't really put real estate in the group of investments that's OK, depending on details. There's plenty of stories of well-connected people frontrunning government endeavors that require lots of land. Sometimes that has positive results: civic minded person buys up land without raising eyebrows, then sells it to government for a song; sometimes it's negative: less civic minded person buys up land and then sells it to government or others for much more than they purchased it for, in large part because of official decisions they participated in. I know some states have part time legislatures, so the members often have other jobs, but a federal office is a full time job, year round, regardless of recesses. I don't think it's unreasonable to demand that office holders avoid potential conflicts of interest by avoiding any sort of investment outside of personal residences and well diversified mutual funds (and well diversified ETFs). Plus or minus rental housing owned prior to office. It's not that big of an imposition, unless your spouse is an active stock trader (for work or hobby), but in that case... Sometimes you have to make sacrifices for a spouse's career.
- lukas099 2y agoIdeally the legislation would be about the same as for company insiders, no?
- orblivion 2y ago> Any effort by Congress to police itself is really just political theater for consumption by the unsuspecting voter. I heard an interesting proposal to have a bill that grandfathers in sitting members of congress. That way they get credit for changing the system but they don't lose the benefits themselves. It's ugly but it's more likely to eventually get the job done.
- nojvek 2y agoNothing stopping the next congress from reversing it. It's the same deal with supreme court. They call the shots in between the lines.
- andrewla 2y agoI'm doubtful -- this is like saying you can sidestep the law against murder by not getting caught. Obviously some of this will depend on how the legislation is drafted, but there's a difference between whether those actions shield you from prosecution or if they just make it harder to detect. Most likely those sidesteps will be seen for what they are, and when prosecutors become aware of them they will still investigate and prosecute for violating the statute. Under current law there are members of Congress that have been plainly guilty of insider trading and yet prosecutors have declined to prosecute (the article mentions this explicitly for COVID-19 insider trading). It is entirely possible that there will be a lack of prosecutorial enthusiasm, but hopefully this will have a chilling effect on some of the most flagrant cases (cough Pelosi).
- alexjplant 2y agoI have some play money in the $NANC Democratic Whales ETF [1] that "invests in equity securities purchased or sold by Democratic members of Congress and their spouses". It's up 23% YTD and is beating the S&P500. Incept date is roughly 18 months ago... I wonder if the greater attention brought to their financial activities is prompting this move? The cynic in me is disappointed because it could mean the end of my corruption-fueled beer money gravy train while their activities continue in a more clandestine fashion. As an aside: this post is not meant as a partisan criticism. I don't invest in the Republican equivalent $KRUZ because last time I checked it wasn't doing as well as $NANC. [1] https://www.subversiveetfs.com/nanc https://www.subversiveetfs.com/nanc
- 0cf8612b2e1e 2y agoI have always wondered how this would perform. The caveat in my mind has been that there is a (significant?) lag between when the trade is made, and when it must be reported. If there is a strong buy/sell signal, I have assumed it would be cold by the time I had access to that information. Also thought a limitation of the STOCK act was that partners (?) did not have to report their data, so a savvy representative could hide their trades through direct family. It would be fun to compare the two parties portfolios. Are there ideological companies which are helping/hurting the overall performance? One group is better at timing?
- MOARDONGZPLZ 2y agoThere can be a lag, but not always. Sometimes it’s just a day or so between trade and reporting. Seems like one way to derisk would be to evaluate the time between trade and reporting plus whether anything significant has happened in that timeframe. For example, Senator buys a stock, stock jumps and plateaus a week later, buy is reported a month later would mean don’t add this to ETF.
- twothreeone 2y agoI thought they have 60 days to report trades [1] and there are a bunch of stock-based investments that explicitly don't require reporting (EIF's)? Sure, if somebody decides to voluntarily file on day 1, or buy stock "raw" that's cool, but in general there should be quite significant lag or gaps (to the point where short/medium-term there's no signal basically). [1] https://ethics.house.gov/sites/ethics.house.gov/files/documents/FDInstructionGuide_current.pdf https://ethics.house.gov/sites/ethics.house.gov/files/docume...
- zombitack 2y agoCan't they still be prosecuted by the SEC for insider trading? /s
- lukas099 2y agoI know you said /s, but are members of Congress legally "insiders" for companies? I'd think the simplest solution would be to write a law stating that they are, for any company they are writing laws about, considering writing laws about, etc.
- zombitack 2y agoI think they're insiders if they know something's about to happen the general public isn't privy to that will affect the market. I don't think you need to be part of a company to be an insider. For instance, you could be part of a regulatory board knowing you were about to open up restrictions on something that would enable a company to make money in a sector it was previously outlawed from and it would be only natural to invest in that company before the regulatory change went public.
- andrewla 2y agoAnyone who uses material non-public information to trade stocks is guilty of insider trading under current interpretations. If a member of Congress does so then they are also guilty. The question becomes whether you can prove this and whether a jury will convict on it; to date law enforcement has generally declined to prosecute these cases (as mentioned at the end of the article about COVID trading) The SEC also requires that "insiders" make certain filings well in advance of trading stocks, but that is a separate issue.
- andrewla 2y agoThe SEC can pursue civil action for insider trading, but insider trading is also a criminal offense prosecuted by the various Attorneys General and investigate by law enforcement. I'm not aware of any successful prosecutions for insider trading for members of Congress; the article does mention the FBI's investigations in the wake of COVID-19 that ended with prosecutors declining to make any charges.
- robbyiq999 2y agoI'd suspect there's loopholes here, the trading will instead be done by a hedge fund on behalf of the congress member(s)
- _DeadFred_ 2y agoA hedge fund isn't granted immunity from insider trading charges like Senators are.
- robbyiq999 2y agoThis law isn't classifying anyone as insiders. I don't think there's an intention in the bill to ban trading by doing so.
- binary132 2y agousually when I see the phrase “strike bipartisan deal” I assume it is something nefarious this headline sounds nice where’s the nefarious angle?
- jfengel 2y agoThe nefarious angle is that this isn't actually going to pass. It's already July. Congress basically doesn't work at all in August or October, and there are a bunch of "state work periods" on top of that. And then there's the election. This "bipartisan deal" is a bunch of Senators. It still hasn't passed the Senate, much less gone to the House, much-much-less gotten wrangled in reconciliation. There's a possibility it'll be picked up and actually worked on during the "lame duck" session after the election. But most likely, this is the last you'll ever hear of it. Unless you live in one of their states, and you go to a campaign rally, where they tell you about the great thing they're working on.
- binary132 2y agoThat makes sense, thanks for contextualizing
- janalsncm 2y agoOk, so there’s not a ton of info in the article about the actual bill itself. Only the caption on the image lists the name: the ETHICS Act. If you check S.1171 you can see it is in the Committee on Homeland Security and Government Affairs. It may die there if nothing else happens. If you think this is an important bill, you can contact the members of this committee. They are listed here: https://www.hsgac.senate.gov/about/committee-members/ https://www.hsgac.senate.gov/about/committee-members/ You should inform them that this is important to you, and if they don’t take action on this you will not vote for them or donate to their campaigns, and will support their opponent instead. This last bit is controversial but important. Politicians care about staying in office. If you will be supporting a candidate regardless, your opinion doesn’t matter to them. So you need to tie their election to something that matters to you.
- tines 2y agoReposting from a child comment: I don't know why anyone is talking about insider trading. I don't give a shit if the congresspeople do insider trading. What I care about is that if congresspeople can trade at all, they have a conflict of interest in doing their legislative duties. They are incentivized to pass laws that will benefit corporations and make the stock market rise. That's what is unacceptable about Congress trading. Banning trading totally is the only thing that matters.
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- banish-m4 2y agoWon't stop lobbyists, spouses, their financial advisors, or them from taking gold bars. 95% are still crooks, or campaign finance reform would've passed years ago. This is a performative ruse.
- RickJWagner 2y agoIt's about time.