The media has gone to town on the issue of insider trading by powerful Congressmen.

The chief culprit according to media reports has been Rep. Spencer Bauchus. Bachus reportedly received a confidential briefing from the then Treasury secretary and chairman of the Fed in 2008, which was rather bearish on the economy. The next day, he was said to have made a massive bet via options against the market. He also cashed put a previous bullish bet on GE on that day. In another incident, Bachus made a bet on a railroad company while a stimulus bill was being worked out--and made a $16,588 profit.

The Washington Post reports that Bachus made lots of trades, often involving bets of $10,000 or less, that tended to coincide with “major policy announcements by the federal government and industries under his congressional oversight.”  He sometimes lost money on trades.

While the conventional wisdom holds that such trading is “legal” in that there are no laws that specifically prevented it, the Office of Congressional Ethics has other ideas. It thinks there may have been some foul play and possible breaches of SEC laws, the Post notes. The investigation has been underway since last year, but was just now leaked to the press.

It remains to be seen if other Congressmen will be implicated, as the issue continues to rock the government. Both the House and Senate have passed bills aiming to outlaw insider trading by their members. Bachus may end up being the sacrificial lamb.

For more:
- here’s the article  

Related article:
Law to stop Congressional insider trading