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Government information blog with an Anti-Corruption agenda.

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Congress and Insider Trading

Posted by italco on August 10, 2009

Congress

“The federal government has finally got the message that it’s time for stronger oversight of Wall Street and the financial services sector.  It’s also time to put an end to secret spending and insider trading,” the e-mail reads. “A dangerous legal loophole still exists which allows members of Congress and high-powered executive branch appointees to exploit ‘insider’ knowledge of the financial industry in order to turn personal profit.”
 
It goes on to describe an army of lobbyists and traders who “haunt the halls of Congress seeking insider tips from staff – known as ‘political intelligence consultants'” who may also use the confidential information.
 
The e-mail asks supporters to write their representatives to support the Trading on Congressional Knowledge Act, a bill sponsored by Reps. Louise Slaughter of New York and Brian Baird of Washington, that would ban insider trading by lawmakers, members of the executive branch and staff, and require that they publicly disclose stock trades of more than $1,000 within 90 days. It would also require the “political intelligence consultants” to register as lobbyists in both chambers of Congress.

Thomas Newkirk, a partner with the law firm Jenner and Block, told us that indeed there’s some uncertainty about how insider trading rules impact members of Congress and their staff.

For example, in 2001, a financial consultant meeting with the Treasury Department learned that the department planned to kill off the 30-year bond. In turn, the consultant tipped off traders at Goldman Sachs who proceeded to use that information to make the firm lots of money. It was considered insider trading because the consultant knew he was not supposed to release the information, Newkirk said. Federal regulators settled with Goldman Sachs and the consultant for about $10.3 million in September 2003.

But with members of Congress, it’s different. Unless lawmakers have some express confidentiality agreement — whether it’s in writing or in word — they can do whatever they want with the information they obtain on Capitol Hill, Newkirk said. 

Bruce Carton, a former Senior Counsel with the SEC’s enforcement division and current editor of Securities Docket, agreed there is uncertainty about the rules. “Insider trading depends on some kind of duty. You can steal information, but unless you have some sort of duty of confidentiality to it, you’re not going to be held liable,” Carton said.

Right now, there is no duty of conflict for Congress, their staff or executive branch employees, he said.

“It may be unethical, and it may be unseemly, but it’s not illegal,” Carton said. http://www.politifact.com/truth-o-meter/statements/2009/aug/06/public-citizen/public-citizen-gets-it-right-about-insider-trading/

I have written many blogs concerning congress having personal holdings in the corporations they govern. I am in shock that those we send to Washington wouldn’t show more restraint and close any and all loop holes connecting Congress with Wall-street.

Isn’t that what the ethics committees are suppose to do? They shouldn’t have to prove if insider information is being utilized…the fact a member of congress has holdings in the corporations they govern should be concern enough to imply a conflict of interest exists.

If you are serving in congress and set on a committee then you should not be invested in the corporations your committee governs. To me, this is common sense ethics. The Ethics committee needs to make it a rule since they can’t be trusted to govern themselves.  

Its not just in the financial sector either….look what is going on with Health Care Reform…the committee members have personal holdings in the insurance companies. It is time to close the loop holes and bring true ethics to American Government. Use your vote to help bring ethical members to Washington!!

 

Why are we tolerating this?    Vote Them Out!!

“Beat The Drum”

 

 

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10 Responses to “Congress and Insider Trading”

  1. jammer5 said

    Good luck with that. Remember Obama making promises to regulate the financial industry? Dum de dum dum . . . holding my breath still . . . dum de dum dum . . .
    Washington is owned and operated by business and I don’t see it changing. We’re the only developed nation that allows the insurance industry to make money off the backs of the sick, and who do you think is groveling the most to keep them insurance dollars coming in? Bingo . . . every freakin elected person on the beltway.

    You are dead on about the Hispanic vote. Los Angeles will have more Hispanics than whites in less than a decade. If they roll out in any force, the GOP will have a rough time surviving. Glen, cry me a river, Beck; Rush, flatulence in broadcasting, Limbaugh; Ann, your damn right I’m neutered, Coulter . . . serious weeping, wailing and gnashing of implants. And I love tacos 🙂

    • italco said

      LOL…I am very found of tacos myself. In fact, the hispanic culture has a lot to offer all of us. It will be interesting to watch the change in politics over the next decade. I suspect we are in for quite a show as early as 2010. Thank you for your comment Jammer..I enjoyed your insightful response.

  2. Geonite said

    I agree with you but voting them out won’t change anything in this regard. Power corrupts and almost anyone in their position will be corrupt. You can’t enforce it without breaking the constitution.

    It’s a maddening fact of life that we can’t change.

    Personally I’m very careful to never deal with anything that I have any sort of interest in. My landlord is a contractor and when he had an installation in my area I asked a colleague to do the permitting and inspecting. On the other hand my staff manager goes around doing personal favors for friends in my area. I’ve complained about it and nothing was done. I take comfort in the fact that he is retiring in December and won’t be able to wreak havoc after that.

    • italco said

      You are absolutely correct and why I fight for ethics reform in congress. As long as the ability to be corrupt is readily available the “power” will create the conflict of interest. Take away that abilty with laws that don’t allow for the conflict to exist then true change can be accomplished. To do that we must vote in those willing to put forth legislation that calls for that kind of reform and hold them to it.

      This has to be done on a grass roots level and pushed on congress…it will not happen with the players in play right now (current congress)…they make too much money to change anything. 88% of congress is up for re-election. This is the best chance we have to do it.

      Watch the effect the Latino vote has in 2010….mark my words…reform is comming, I see it on the wall.

    • Geonite said

      I hope you are right.

    • italco said

      Lets take a look at the simple facts, Fact 1 – The hispanic vote makes a huge difference in most states now. Fact 2 – The black vote makes a big difference in most states. Fact 3 – combined they are no longer the minority (and they have joined forces). Fact 4 – The GOP Senate and House voted against Supreme Court Justice Sonia Sotomayor.

      I watch the Hispanic comedians and they are having a field day with this stuff and calling for Latino’s and Blacks to vote “against” the GOP canidates that “didn’t” vote her….and naming names in the areas they are giving performances. They are drawing crowds in cities across america in excess of 140,000 per night in major US cities (filling up stadiums).

      It is certainly going to be interesting to watch.

      I don’t know how the GOP is going to be able to survive in 2010. They did it to themselves…again!

  3. italco said

    Evidently, we have loop holes in our system that allows for our congress to personally profit financially and the ethics committee can’t apply any law to it. This is why those loop holes need to be closed with strict guildlines and new committee members elected to the board of ethics in both the House and the Senate to enforce those rules.

  4. Lette said

    The problem with these “ethics committees” is that they won’t bring a member of congress up on ethics violations. The problem is that even when violations so obviously exist, they’re cleared of the charges with a mere slap on the wrist. We just saw it happen with Dodd. And don’t forget about John McCain.

    • Lette said

      I meant that they WILL bring a member up on charges. They just won’t make ’em stick!

    • italco said

      I agree, in fact you can look back at a recent post where I updated the findings of the ethics committee concerning the Countrywide scandal. Even with eyewitness tesimony stating they knew they were getting gratuitous treatment, they were still found to be innocent of wrong doing.

      “The Senate Ethics Committee on Friday dismissed complaints against Sens. Christopher J. Dodd (D-Conn.) and Kent Conrad (D-N.D.) that they used their positions of power to obtain special deals on home loans from lender Countrywide Financial. After a year-long investigation, the committee told Dodd and Conrad that it found “no substantial credible evidence” that they violated the Senate’s ethics rules. The committee found that the senators’ loans were processed through the special program, but that they didn’t appear to profit financially from it.

      But the committee also admonished the senators, saying they “should have exercised more vigilance in your dealings with Countrywide in order to avoid the appearance that you were receiving preferential treatment based on your status as Senator.” http://www.washingtonpost.com/wp-dyn/content/article/2009/08/07/AR2009080703015.html?hpid=moreheadlines

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