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Wednesday, September 28, 2011

Politburo on the Potomac: Members of Congress exempt themselves from their own laws

From:
Members of Congress Are Exempt from Insider Trading Laws and Make 9% Per Year Trading on Inside Information

(EconomicPolicyJournal.com) -- by Robert Wenzel --

I wasn't aware of this, but apparently the damn hypocrite members of Congress are exempt from insider trading laws, when they vote on legislation that will impact their portfolio and as a result of knowledge they gain from their Congressional activities. Nice that the bastards have exempted themselves.

Valerie Richardson at the Washington Times reports:
Strict laws ban corporate executives from trading on their insider knowledge, but no restrictions exist for members of Congress. Lawmakers are permitted to keep their holdings and trade shares on the market, as well as vote on legislation that could affect their portfolio values.
Not surprisingly, the data suggest that Congressmen are using this insider edge to profit. Here's Richardson again:
It’s no secret that members of Congress qualify as political insiders, but a new report strongly suggests that they also may be insiders when it comes to trading stocks.

An extensive study released Wednesday in the journal Business and Politics found that the investments of members of the House of Representatives outperformed those of the average investor by 55 basis points per month, or 6 [sic] percent annually, suggesting that lawmakers are taking advantage of inside information to fatten their stock portfolios.

“We find strong evidence that members of the House have some type of non-public information which they use for personal gain,” according to four academics who authored the study, “Abnormal Returns From the Common Stock Investments of Members of the U.S. House of Representatives.”

To the frustration of open-government advocates, lawmakers and their staff members largely have immunity from laws barring trading on insider knowledge that have sent many a private corporate chieftain to prison.
It should be noted that this study only took into account trading that has been disclosed. I suspect that the more egregious trading is done in a manner which is not reported...MORE...LINK

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