Before the STOCK Act passed, Congress outperformed the market by 20%, with some senior Republican leaders doing as well as 35% [0,1]. Before the pandemic began in the US, 4 US Senators were picking up medical stocks after closed-door briefings. Investigations were opened by the DOJ, but they were all dropped. [0] https://www.theatlantic.com/ideas/archive/2020/03/congress-i... [1] https://onlinelibrary.wiley.com/doi/1…
If anyone is interested, I've been building dashboards that display trades made by U.S. congressmen and estimate their returns over time from their trading while in office. https://www.quiverquant.com/sources/senatetrading https://www.quiverquant.com/sources/housetrading One weakness of the performance visualization is that some of the most extreme results are from people who have only made one or two trades while in…
Many believe it's time to do away with lawmakers making stock trades
181–190 of 229 posts
Re: Many believe it's time to do away with lawmakers making stock trades
#182Before the STOCK Act passed, Congress outperformed the market by 20%, with some senior Republican leaders doing as well as 35% [0,1]. Before the pandemic began in the US, 4 US Senators were picking up medical stocks after closed-door briefings. Investigations were opened by the DOJ, but they were all dropped. [0] https://www.theatlantic.com/ideas/archive/2020/03/congress-i... [1] https://onlinelibrary.wiley.com/doi/1…
If anyone is interested, I've been building dashboards that display trades made by U.S. congressmen and estimate their returns over time from their trading while in office. https://www.quiverquant.com/sources/senatetrading https://www.quiverquant.com/sources/housetrading One weakness of the performance visualization is that some of the most extreme results are from people who have only made one or two trades while in…
> and estimate their returns over time from their trading while in office.
Sorry, but there is no possible way to do this with any sort of precision or accuracy with a 45 day lag time on reporting trades.
Re: Many believe it's time to do away with lawmakers making stock trades
#183Outright banning trades will only obscure congressional trading (shell corps, friends/family, etc.) I would prefer a public registry listing all congressional trades. I know this is legally available data, but very difficult to access.
We already have a regulatory framework for managing those issues that was built to deal with insider trading.
For obvious reasons we can’t allow the executive to persecute the legislature with something as difficult to prove as insider trading. It could be used by a tyrant to push through legislation in theory.
Re: Many believe it's time to do away with lawmakers making stock trades
#184Earlier quoted context omitted.
They should be allowed to go in something like an S&P 500 index fund. But personally I have blackout dates trading my own company stock why don’t they have any restrictions?
Investing in an index fund might even incentivize them to ensure the economy as a whole does well.
To be fair, it might incentivize them to prioritize overall stock growth over the more pressing issues of the populace. Mixed bag on that one I think
Re: Many believe it's time to do away with lawmakers making stock trades
#185Earlier quoted context omitted.
I think the cleanest law here is to change the law to clarify that non-public information gained by public servants and representatives that can have an affect on a stock's price should be treated as "material non-public information." Then the SEC can do their jobs like they do with other insider traders. Remember that ONLY elected congresspeople are exempt from rules like that. Other public servants are not. This is…
> "This is one of the biggest signals that the US is an oligarchy and not a democracy." The constitutional doctrine of separation of powers generally limits regulatory law enforcement by the executive against the legislative branch. This is actually a signal of constitutionally limited government-- this is a design feature.
Other countries have no problem prosecuting lawmakers for insider trading.
Re: Many believe it's time to do away with lawmakers making stock trades
#186Earlier quoted context omitted.
Whoa whoa slow down there, what are we, a free market? That's only for HNWI and hedge funds.
Free markets do not necessarily mean that everyone has equal access to information. We've got market regulations so that less sophisticated retail investors have a chance against the more sophisticated / secretive groups with more money / knowledge / power than us. A laissez-faire market would encourage secrets as a means to protect ones own capital. To force some people to give up secrets (ie: regulations against in…
"But in practice: how would we even write a law that hampers this behavior from Congressmen? Who will keep track of which stocks Congressmen are trading, and which committees they are a part of?"
That's pretty easy, actually.
Congresscritters are Federal employees. They already fill out lots of forms for salary and healthcare and expense reimbursement... so you add:
1. a Form 3 equivalent to register all the interests that they hold on day one, with a list of brokerages that they have accounts at. An accurate form would be a requirement to collect any salary or reimbursement.
2. an authorization sending copies of all trades to an forensic accounting office, perhaps under the auspices of the IRS. Again, don't fill this out means not collecting your salary.
3. a warning that all trades while you are a Congresscritter must be made with a 10b5-1 plan or be pre-emptively considered insider trading
There we go. While we're at it, extend this to all the positions appointed by the executive branch and confirmed by the Senate.
Re: Many believe it's time to do away with lawmakers making stock trades
#187I'm completely fine with politicians being paid significantly more if them, their partners and their relatives faced serious prison time is they did the sort of insider trading that is considered completely normal and weirdly they're allowed to do but it's illegal if the lowly plebs do it. End of the day these people are paid very little on paper for the amount of pressure and responsibility yet if you follow their f…
U.S. Reps and Senators have an annual salary of around $180,000*, which is in the order of twice the national median income. Why do you think they need to be paid more? --- *They also have a baked-in-statute annual cost of living adjustment, which is more than we can say for the vast majority of people in the country. Though they have voted not to take it for the last decade. (If they had, I believe the current salar…
While this is true, I'm sure there are a lot of costs that eat that up pretty quickly. For example, you have to essentially have two places of residence, one in your constituency and one in DC. There are costs for family, travel, and other expenses that are personal and can't (or shouldn't) be charge through the government. I don't fully understand what they can and can't charge, but that gets chewed up pretty quickly if you break it down.
Re: Many believe it's time to do away with lawmakers making stock trades
#188Earlier quoted context omitted.
No, but they intended to limit the Presidents ability to create new regulations that could put legislators in jail.
Except the legislature gave the executive branch the power to create and enforce those regulations. Not to mention the type of abuse the restriction is aimed at preventing would still be allowed to take place against regular citizens (classic examples are ATF definitions changing randomly and even conflicting with statute or other regulations).
Yes, it gave the executive branch those powers but exempted itself.
And with good reason - can you imagine if a sitting president created a new regulation that conveniently put his congressional opponents in prison?
Re: Many believe it's time to do away with lawmakers making stock trades
#189I'd be interested to know how often Congressional stock trades have been used to reason about classified information, i.e. a number of senators invest in a certain stock, implying that a suspected but classified decision went a certain way.
Re: Many believe it's time to do away with lawmakers making stock trades
#190I'm completely fine with politicians being paid significantly more if them, their partners and their relatives faced serious prison time is they did the sort of insider trading that is considered completely normal and weirdly they're allowed to do but it's illegal if the lowly plebs do it. End of the day these people are paid very little on paper for the amount of pressure and responsibility yet if you follow their f…
U.S. Reps and Senators have an annual salary of around $180,000*, which is in the order of twice the national median income. Why do you think they need to be paid more? --- *They also have a baked-in-statute annual cost of living adjustment, which is more than we can say for the vast majority of people in the country. Though they have voted not to take it for the last decade. (If they had, I believe the current salar…
Maybe we should be considering the other types of positions they could’ve been entering. Consider the backgrounds of many of these people - they’re not high school graduates.