Congress Wants To Ban Stock Trading...Again | Summary and Q&A

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January 30, 2023
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Andrei Jikh
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Congress Wants To Ban Stock Trading...Again

TL;DR

Congress member's timely stock trades before Google lawsuit sparks outrage and renewed discussions about banning insider trading by elected officials.

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Questions & Answers

Q: Was insider trading involved in the Congress member's stock trades before the Google lawsuit?

While suspicions are raised, publicly available information suggests that the trades were not insider trading. A Bloomberg article from August 2022 mentioned the potential lawsuit. However, the timing of the trades is still concerning and has sparked outrage.

Q: Do politicians consistently outperform the market with their trades?

Data shows that between 2020 and 2021, some members of Congress were able to outperform the market on average. However, this does not guarantee insider trading. Politicians have access to information and discussions that can give them an advantage over the public.

Q: Does the Stock Act effectively hold members of Congress accountable for their trades?

The Stock Act requires members of Congress to report their trades within 45 days. However, some members inaccurately report or do not report their trades at all, indicating a lack of accountability. The Act is not always followed, as Insider found 72 members of Congress out of compliance.

Q: What is the Pelosi Act and how does it propose to address the issue of insider trading by politicians?

The Pelosi Act, introduced by Senator Josh Hawley, aims to prevent members of Congress from owning, buying, and selling stocks and equivalent investments during their time in office. It allows ownership of index funds, mutual funds, ETFs, and U.S treasury bonds. Violations would result in the profits being given to the U.S treasury.

Summary & Key Takeaways

  • The Department of Justice is suing Google for breaking anti-trust laws, leading to calls for breaking up the company. However, a member of Congress sold 30,000 shares of Google stock before the lawsuit was filed, raising suspicions of insider trading.

  • Questions arise about how a member of Congress, with a salary of around $220,000 per year, amasses a net worth of over $170 million. This raises concerns about the influence of politicians in the stock market.

  • Insider trading by politicians is not a new issue, with data showing that some members of Congress outperformed the market. The Stock Act, designed to make members of Congress accountable for their trades, is not always followed.

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