Why is congress exempt from insider trading laws? Because they make the laws and, of course, make some sweet ones for themselves. That's why they also get better health care than you or I and earn their pension after just one term.
Forgive my ignorance on this one, but is it considered "insider trading" if someone trades based on knowledge of a new law congress is introducing?
C'mon, guys. Take it easy on our poor, maligned members of the congressional persuasion. You're just jealous that they got their asses covered for their inside deals and you can't ... they get designer rectal thermometers for the rest of their lives, and you won't. Just chill. Look at all those other expenses they have: there's a .... and of course ... but don't forget ... then of course ... don't forget ... there's a ... ... well, I know there's a LOT of shit they must ... have ... ahh ... wanted to pay for ... but ...
Not if you're a memeber of Congress. You can trade on pending legislation, votes, etc. Sometimes you can almost feel the tension surrounding votes while Congressman jockey postions in their accounts. Suppose all the Congressman have broker accounts. Ya think, a movement in buys and sells with your name on the account garners attention? A real eye opener when I was interested in asbestos stocks.
But is it actually illegal for everyone else, aside from congress? So if i was to hear from some congressional aid that dems were thinking about introducing a new law and i bought or sold something based on that it would be illegal?
It's illegal for you to trade on anything that isn't public knowlege. For Congress and staff it doesn't matter. They can trade away based on anything they know, public or private. At least, that is my understanding.
I never realised that, I mean i understood the Insider trading laws that pertain to trading based on non public company information but i never realised that trading on congressional information was illegal, for most of us. Has anyone ever seen someone (outside of congress) prosecuted on insider trading laws based on an upcoming rule change?
A study of the results of stock trading by United States Senators during the 1990s found that that Senators on average beat the market by 12% a year. In sharp contrast, U.S. households on average underperformed the market by 1.4% a year and even corporate insiders on average beat the market by only about 6% a year during that period. A reasonable inference is that some Senators had access to â and were using â material nonpublic information about the companies in whose stock they trade. Government officials have recently been scrutinized for using information acquired in the performance of their official duties to gain market-trading advantages. Lobbyists have similarly been criticized for collecting material nonpublic political information from Capitol Hill contacts and selling it to their clients - notably hedge funds - who presumably use the information in their market transactions. Is this insider trading? Most likely not. Should it be? A few members of Congress have responded by introducing legislation in the past three Congresses that would bring trading on this âpolitical intelligence,â by government insiders and outsiders, under the umbrella of the federal securities laws. Unsurprisingly, the legislation has failed to garner significant political support. http://www.warriorsfortruth.com/stock-market-insider-trading-news.html More here: Abstract: In this paper, we examine the hypothesis that hedge fund managers obtain an informational advantage in securities trading through their connections with lobbyists. Using datasets on hedge fund long-equity holdings and lobbying expenses from 1999 to 2008, we show that hedge funds that are connected to lobbyists tend to trade more heavily in politically sensitive stocks than do non-connected funds. Furthermore, using a difference-in-differences approach, we find that connected hedge funds, relative to non-connected ones, outperform by 1.6 to 2.5 percent per month on their holdings of politically sensitive stocks, relative to their non-political holdings. Our study provides evidence for the ongoing debate about regulatory reform governing informed trading based on private political information. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1707181 There's other more and other info out there but in the grand scheme of things the chain of influence in unbroken, Everybody, who's anybody is in on it. One could probably be a janitor on the floor of the Senate and make out quite well. Everybody else is a chump.