Congress, Insider Trading, and the Financial Crisis

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Congress, Insider Trading, And The 2008 Financial Crisis: " . . . . The lawmakers, many of whom held leadership positions and committee chairmanships in the House and Senate, changed portions of their portfolios a total of 166 times within two business days of speaking or meeting with the administration officials. The party affiliation of the lawmakers was about evenly divided between Democrats and Republicans, 19 to 15. The period covered by The Post analysis was a grim one for the U.S. economy, and many people rushed to reconfigure their investment portfolios. The financial moves by the members of Congress are permitted under congressional ethics rules, but some ethics experts said they should refrain from taking actions in their financial portfolios when they might know more than the public.“They shouldn’t be making these trades when they know what they are going to do,” said Richard W. Painter, who was chief ethics lawyer for President George W. Bush. “And what they are going to do is then going to influence the market. If this was going on in the private sector or it was going on in the executive branch, I think the SEC would be investigating.” Of course they would. Indeed, people like Michael Milken and Martha Stewart were subjected to intensive SEC and FBI investigations over the mere suggestion that they had traded on information that they had received from insiders. Milken’s actions were, of course, far more serious than Stewart’s and Stewart ended up being convicted only of lying to Federal agents, but the principle remains the same. The law has been eminently clear for years that trading on material, non-public information is forbidden. Unless, that is, you happen to be a member of Congress. . . "

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