The other day I noted Greg Shill's new article on Congressional stock trading. Ben Edwards has now posted a much more detailed assessment of Greg's article.
In his essay, Shill takes up the issue from a policy perspective, looking at how we ought to regulate Congressional Securities Trading. He draws from ordinary securities regulation and suggest pulling over the trading plan approach and short-swing profit prohibition we use for corporate executives. This approach should help manage ordinary securities transactions by members of Congress and their staff. He also advocates for limiting Congressional investing to U.S. index funds and treasuries. This would reduce the incentive to favor one market participant over another. ...
Of course, we'll still face some implementation challenges. When and how would we require newly-elected and currently-serving officials to liquidate existing portfolios? What kinds of exceptions would we make for private-company investments where no ready, liquid market exists? These implementation challenges strike me as mild compared to the benefits.
I'm not so sanguine about the costs of banning securities trading by members of Congress. But I'm definitely on board with the proposals to adapt Rule 10b5-1 and Section 16(b) to the Congressional context.
