Tuesday, December 6, 2011

WaPo comment re Congresional Insider Trading

http://www.washingtonpost.com/politics/bill-to-ban-insider-trading-in-congress-is-suddenly-popular/2011/11/30/gIQAn193DO_story.html

My post was pretty unpopular:


lcdlover
12/1/2011 10:22 AM EST
Hello
I was prepared, when I peeked at the comments, for stratospheric levels of dudgeon, and my expectations were met (the numbers are kind of thin though - if I speculate that this is due to the D weighted, so far, targets of suspicion, please don't stop reading my post). It's getting to the point where righteous indignation, cynicism and just general mistrust emanates from the citizenry in a permanent way. A state of living described as "suspicion strapped to her hip like a gun".
I swear some of you guys could whip off a negative comment in your sleep, or as automatically as discharging a "Gesundheit!" after a sneeze.

Just kidding there a bit. But before we gather the peasantry and storm the Bastille, please have a little look at the Holman Jenkins column from a fortnight ago entitled "Congress's Insider-Trading Non-Scandal". Don't turn away because the lead is telegraphed (the subhead -The scandal isn't what they do with their own money, but what they do with ours- is catchier). Mr Jenkins, a pithy WSJ business columnist who never talks down to the reader, is a stickler for the definition of insider trading, and has bemoaned in past remarks the sloppy decline in precision applied to that label as an English teacher laments the decay in spelling skills.

To wit: "Congressmen and their staffs aren't insiders in the classic sense, working for companies and holding a fiduciary duty to shareholders." And: "Long ago, insider-trading enforcement made a wrong turn when it began behaving as if the goal were to keep valuable information out of stock prices rather than merely to police betrayals of trust by true fiduciaries. The SEC has come to treat stock investing as a kind of sporting event, in which information ideally should be disseminated simultaneously to all traders so the one with the fastest fingers can profit. " Mr Holman explains, in his witty way, that our solons, far from being rapacious swindlers, are more accurately portrayed as as unsophisticated and sophomoric as the rest of us rubes who see a bit on CNBC and make a trade as if we have an edge. We don't and they don't either. (Mr Jenkins also mentions that recent studies upend the notion that Senate and House Members earn more than average on their stock investments. He asserts that "More persuasive is recent work suggesting that congressmen underperform the market for all the reasons that most active traders do. They buy high, sell low, and waste money on trading commissions."

So, commenters, give it a read and perhaps you will retract your obloquy.

wgh234
12/1/2011 11:06 AM EST
So, anyone who has knowledge of a coming event in a company which will affect the public opinion of that company, i.e. invest/not invest in the company, does not have "insider trading" unless that person works for that company. Is this how you justify members of Congress not having "insider trading"?
Please! Give me a break of sanity.

lcdlover
12/1/2011 11:55 AM EST
Hi and thank you for your reply. I think something is the matter with my web browser because the left part of all the comments is obscured by the little box that is intended to show the person's photo. Did you bother to read the column I referred to? I thought Mr Jenkin's logic was quite sane. In Pelosi's case the "coming event" was pending legislation that was public knowledge also and the bill did not pass.

erinoconnell
12/1/2011 3:51 PM EST
"It's getting to the point where righteous indignation, cynicism and just general mistrust emanates from the citizenry in a permanent way."

GOOD. People are starting to awake from their slumber.

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