FORTUNE writes that last Sunday a 60-Minutes report threw a welcome spotlight on a preposterous, long-standing situation that virtually no one openly defends: the fact that, as a practical matter, U.S. Senators and members of the U.S. House of Representatives can -- and do -- trade stocks on inside information that they obtain through performing their legislative work.
Although many observers have decried this scandalous situation over the past decade, without having spurred Congress to surrender its sleazy perk, the well-timed 60-Minutes report, coming when Congress hit a new low in approval ratings (9%, according to a CBS News/New York Times poll) may finally shame it into plugging the loophole.
Congressmen do not literally enjoy any express "exemption" to the insider trading laws. If, for instance, a CEO tipped off a senator that the company's next earnings report would exceed expectations, and the senator traded on that information, he could go to jail, just like you or me.
The problem arises with respect to market-moving information a Congressman learns in the course of doing his legislative work. Like, say, realizing after cloakroom discussions that there are now sufficient votes to defeat a tax amendment that would have adversely affected a certain industry. Or learning from committee work that a company has won a big defense contract, though the announcement will not be made till the following Monday…..
Learn more at http://finance.fortune.cnn.com/2011/11/18/insider-trading-congress/?iid=SF_F_River
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