On the heels of ex-lobbyist Jack Abramoff's claim that insider trading on Captiol Hill is rampant comes a report that 60 Minutes is going to do an expose on the subject:
House Minority Leader Nancy Pelosi is the subject of a report on the stock investments of members of Congress that is to air Sunday on CBS' "60 Minutes."
The San Francisco Democrat and House Speaker John Boehner, R-Ohio, were questioned separately at their weekly news conferences Nov. 3 by reporter Steve Kroft. Neither had granted Kroft's previous requests for interviews.
Kroft asked both leaders about stock transactions they made while Congress was considering legislation that could affect the financial and insurance industries. Pelosi and Boehner vigorously denied any connection. ...
roft asked Pelosi why she and her investor husband, Paul Pelosi, bought an initial public offering of stock in Visa, the San Francisco-based credit card company, in March of 2008.
The same month, former House Judiciary Committee Chairman John Conyers, D-Mich., introduced the Credit Card Fair Fee Act, which would have given merchants the power to negotiate lower fees with credit card companies. The bill, hostile to the credit card industry, was passed by the committee but never brought to the floor. Pelosi was speaker at the time, and controlled which legislation came to a vote.
Regular readers know that we've covered Congressional insider trading for a long time here at PB.com. Indeed, I eventually went beyond blogging to academic scholarship on the issue in Insider Trading Inside the Beltway, in which I explained that:
A 2004 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 – and were using – material nonpublic information about the companies in whose stock they trade.
Under current law, it is unlikely that Members of Congress can be held liable for insider trading. The proposed Stop Trading on Congressional Knowledge Act addresses that problem by instructing the Securities and Exchange Commission to adopt rules intended to prohibit such trading.
This article analyzes present law to determine whether Members of Congress, Congressional employees, and other federal government employees can be held liable for trading on the basis of material nonpublic information. It argues that there is no public policy rationale for permitting such trading and that doing so creates perverse legislative incentives and opens the door to corruption. The article explains that the Speech or Debate Clause of the U.S. Constitution is no barrier to legislative and regulatory restrictions on Congressional insider trading. Finally, the article critiques the current version of the STOCK Act, proposing several improvements.
