Moral Outrage
Whew! God help us!

US Congressmen beat the stock market through insider trading

Over the years, academic studies have found that members of the House of Representatives beat the stock market by as much as six percent per year and members of the Senate do even better than that.

Legal analysts say that Wall Street insider trading laws do not apply to Congress. Powerful members of Congress come into contact daily with market-moving tidbits. That gap between the law and the reality has made Capitol Hill a virtual free-fire zone for insider trading.

Disgraced Washington lobbyist Jack Abramoff says that the most valuable type of information for Congressional insider trading is held by congressional investigators who pry deeply into corporate goings on. A particularly easy target is advance knowledge of the announcement of an investigative hearing into a company.

“Hearings under almost every circumstance are going to have a bad impact on a company,” Abramoff said. “And so some staffers I’ve seen in the past talking about the fact that, ‘Oh, I’m gonna go out and short that company.'”

[Excerpt of CNBC article by Eamon Javers]


One Response to “US Congressmen beat the stock market through insider trading”

  1. According to a new book called “Throw Them All Out” by Peter Schweizer, Rep. Spencer Bachus made more than 40 trades in his personal account in the summer and fall of 2008, in the early months of the financial crisis.

    The fact that Bachus personally traded on private information he received as a result of his job is bad enough. The fact that he was the ranking member of the House Financial Services Committee at the time is simply outrageous.

    In one case, the day after getting a private briefing on the collapsing economy and financial system from Ben Bernanke and Hank Paulson, Rep. Bachus effectively shorted the market (by buying options that would rise if the market tanked.)

    A few days later, after the market tanked, Bachus sold his position and nearly doubled his money.

    And the height of hypocracy? If a corporate executive or Wall Street trader did this–cashed in personally after getting private, non-public information from his work–Rep. Bachus and every other member of Congress would be screaming from the rooftops about how the financial system is deeply corrupt and how the executive should be charged with insider trading.

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