Should Congress be subject to insider trading laws

Insider Trading Laws -- Should they apply to Members of Congress?

The question as to whether or not members of Congress should be subject to insider trader laws should be obvious: yes, they should at the very least be held to the same rules ordinary citizens, stock traders, investors out of the loop of Washington and all others are held to. Indeed, U.S. Senators should actually be held to a higher standard because they took an oath to work for the good of their constituents and for the good of the nation, not for the good of their personal financial bottom line.

Meantime an editorial in the Wall Street Journal refers to the fact that "…Members of Congress…aren't covered by insider-trading laws" and yet good judgment cries out for those laws to apply to Congress. The Journal also mentions a U.S. Supreme Court decision (U.S. v. O'Hagan) that employees who use in an inappropriate way "confidential information from their jobs" are in fact guilty of fraud. The same editorial alludes to a bill that is "languishing" in Congress (STOCK Act) that would prohibit members of Congress from trading securities "based on nonpublic information they obtain." The last sentence in the Journal's editorial tells the story very loud and clear: until there is a scandal that will focus attention on the need to clamp down on Congress vis-a-vis trading securities using information that is not available to the public, STOCK Act will remain tucked away and out of sight.

As the question of Congressional aides (staffers) and insider trading, allowing this situation described by Brody Mullins, Tom McGinty, and Jason Zweig -- that insider trader laws don't apply to Congress -- is unconscionable. "Congressional aides have ringside seats on the making of laws that affect American business" (Mullins, et al., 2010). They earn up to $170,000 annually, Mullins explains, which is a wonderful salary in contrast to what the average middle class family brings home each year. And, moreover, they have access to information "about policies and government action" way before that same information is made available to the public. When there are hearings in Congress during which legislation is being proposed that relates to the economy and business, the aides to Members are privy to what one could fairly say are insider-type tips.

The rules as they are presently enforced only require elected Members and "…about 2,900 of the highest-paid congressional aides to disclose information once a year on their finances" (including gains from trading stocks), Mullins and colleagues point out. What is wrong with that fact is that all aides, not just top aides, should be held accountable for investments they make, in particular those investments made by companies that are in any way connected to legislation that the aides' bosses are working with.

Taking it one step farther, all Members of Congress and all their aides -- top legislative assistants and the underlings of those top echelon staffers -- should be not only be required to disclose their personal finances, but they all should be banned from using any insider information in order to profit. When they get back into private life, there still could be restrictions on what investments they make. There are rules pertaining to members of the executive branch regarding lobbying after being out of government, and those should also apply to Congress and its employees.