Study: Congressmen trading on non-public info
Say it ain't so, please!
Members of Congress could not possibly be enriching themselves by trading illegally on inside information? Correct?
Well, one study published by Business and Politics--the work of several university professors--has found that members of the House Representatives have been able to beat the market substantially over the last nine Congressional sessions.
Representative beat the market by an annualized 6 percent. According to a previous study, Senators have done even better. The study notes that Congressmen are allowed to trade common stocks without special restrictions, and they do not have to recuse themselves from voting on legislation that could affect the values of their stock holdings.
The conclusion: "We find strong evidence that Members of the House have some type of non-public information which they use for personal gain."
In some ways, this is an incendiary claim. The study also notes that the bulk of trading is consolidated among a relatively few Congressmen. At some point, somebody may try to name names. This has been one of those ongoing issues that always seem to fly under the radar. One House bill, the Stop Trading on Congressional Knowledge (STOCK) Act, would impose some restrictions on buying and selling stocks.
- here's a Barron's article