by Paul Blest
Burr's assertion that the SEC law was doing a good enough job preventing insider trading ignored years of research to the contrary. A 2010 Wall Street Journal investigation showed that congressional staffers often had stock holdings in companies benefitting from legislation the staffers were pushing, and a 2004 analysis in the Journal of Financial and Qualitative Analysis showed "abnormal returns" in the stock investments of United States senators. (The researchers found the same conclusion seven years later, when they studied the returns on investment of members of the House of Representatives.)
On closer examination, it appears that what Congress really wants is to keep making the big bucks that come from trading on inside information but to trick those outside of the Beltway into believing they are doing something about this corruption. For one thing, the rules proposed for Capitol Hill are not like those that apply to the rest of us.If that wasn't enough, a 2013 change to the law made it so top-level White House and congressional staffers wouldn't have to follow those disclosure rules. (The change didn't apply to the president, vice president, members of Congress or candidates for Congress.)
Ours are so broad and vague that prosecutors enjoy almost unfettered discretion in deciding when and whom to prosecute. Congress's rules would be clear and precise. And not too broad; in fact they are too narrow. For example, the proposed rules in the Stock bill are directed only at information related to pending legislation. It would appear that inside information obtained by a congressman during a regulatory briefing, or in another context unrelated to pending legislation, would not be covered.
Reached Wednesday for comment on Burr’s STOCK Act vote, spokeswoman Becca Glover Watkins sent over this email, arguing that the STOCK Act didn’t ban congressional insider trading because congressional insider trading was already illegal:
Burr has investments in the gas industry valued from $133,298 to $219,337, according to his 2010 filings. His portfolio includes $36,000 worth of stock in Chesapeake Energy Corp., the second-largest U.S. producer of natural gas. He also holds more than $25,000 in shares of Loews Corp., a holding company with subsidiaries engaged in the exploration, production, marketing and transmission of natural gas.[...]
Burr, along with Georgia Republican Sen. Saxby Chambliss, and two other senators introduced S-1863 in November with bipartisan support. The measure would offer individuals and businesses tax credits for buying natural gas-fueled vehicles or converting existing fleets to run on the fuel. President Barack Obama on Friday said he supported the bill.
* Senator Burr agreed with the nonpartisan Congressional Research Service at the time the original STOCK Act was passed—that insider trading was already illegal and redundant laws are one of the many problems coming from Washington.
* Per the Congressional Research Service, the research arm of the Library of Congress: “It should be emphasized that there never was any exemption or exception from the ‘insider trading’ provisions of securities law for Members of Congress, congressional staff, or for other federal employees, and such persons were subject to the insider trading restrictions in the same manner as members of the general public.”
* Robert Khuzami, then Director of Enforcement at the Securities and Exchange Commission (SEC), said in a December 2011 hearing of the Senate Committee on Homeland Security and Governmental Affairs, “Trading by congressional members or their staffs is not exempt from the federal securities laws, including the insider trading prohibitions.”