"Insider trading is unethical whether it draws on information obtained from Congress or from companies themselves...Members of Congress and federal employees often know what is happening before anyone else. They have access to incredibly sensitive information that can have a dramatic effect on the stock market. The potential for the improper use of that information is very real...

The STOCK Act is not just necessary to ensure the integrity of our securities markets, as important as that is...It's about restoring integrity to this Congress."

May 16, 2007 - Louise M. Slaughter, MS 

"It violates any notion of fairness or common sense that Members of Congress or their staff can legally share nonpublic information about current or upcoming congressional activity with a handful of investors outside of Congress for investment purposes, or can engage in their own trading of securities based on nonpublic information that they obtain by virtue of their position in Congress...

Clearly, the buying or selling of stock based on nonpublic information has the potential to profit some private parties at the expense of others who may not have access to this same information. In addition, I am very concerned that privileging a handful of investors with confidential information about congressional activity is not only a misuse of a congressional office, but also undermines investor confidence in the fairness and integrity of the securities market...

As I have noted, buying or selling stock based on nonpublic information from Congress does not clearly run afoul of current insider trading laws. For this reason, I joined forces with Ranking Member Slaughter to introduce the Stop Trading on Congressional Knowledge, or STOCK Act, earlier this week to put an end to this troubling practice."

Mar. 30, 2006 - Brian Baird, PhD 

"Much Congressional trading based on nonpublic information may not violate the securities laws....

Effective regulation of problematic Congressional trading thus requires a broader prohibition than the securities law definition of insider trading. Fortunately, the proposed legislation [the STOCK Act] apparently recognized the problem, as the Journal reports that the proposed bill would 'prohibit lawmakers and their aides from trading based on information obtained in Congress that is not yet public. And it would prohibit lawmakers and staff from giving that information to others for investment purposes.'

Unfortunately, the bill may well get tied up in partisan bickering. The bill's authors are both Democrats and some Hill observers view it as a slap at Bill Frist, whose HCA [Hospital Corporation of America] stock trades have been questioned, and at Tom DeLay, whose former staffer Tony Rudy has engaged in some questioned trades. The problem, however, is a bipartisan one and a legislative fix deserves bipartisan support."

Mar. 30, 2006 - Stephen M. Bainbridge, MS, JD 

"Congress enacted the Securities Act of 1933, which required registration of publicly traded companies -- making more information open and available to the public. A year later, Congress added more protections for investors. One of those provisions made it illegal to trade stock by corporate insiders who were privy to special information that could help or hurt a stock.

After this generation's corporate scandals, Congress passed Sarbanes-Oxley in 2002 to improve corporate governance and audit independence. But one of the measures added reporting requirements and tougher standards for insider trading.

Unfortunately, Congress forgot itself. It remains perfectly legal for a member of Congress to buy and sell stocks based on information that's not available to the public. Last year it was reported that a 'political intelligence' firm tipped off its clients to an undelivered speech by Senate Majority Leader Bill Frist on asbestos liability. The information was profitable to those in the know.

'This is simply wrong that members of Congress can exchange information...and get rich on it,' says Rep. Brian Baird, D-Wash., who is co-sponsor of a bill [the STOCK Act] to prohibit insider trading by members of Congress and their staffs.

Baird will report to a congressional committee today on the proposal -- and is optimistic...

We think Baird's right. Even if a congressional insider trading ban comes seven decades too late."

Mar. 30, 2006 - Seattle Post-Intelligencer 

"The motivations behind it [the STOCK Act] are utterly pure. It would be unfair for Members of Congress and staff to use inside knowledge of Congress for pecuniary gain.

But how a law like this would be effectively enforced is beyond me. A bar on congressional-insider trading would most likely cause one of the following results:

1. It would be honored in the breach;
2. It would lead to endless (perhaps politically motivated) investigations of our representatives and their staffs; or
3. It would force many or most congressional employees to withdraw from investing as a prophylactic against 2.

None of these would be easy and fair, and compliance would deprive congressional staff of normal sources of income and of participation in investment that keeps their experience and thinking in line with other Americans. The law would not provide investors comfort.

The better solution is to lower the amount and value of congressional-insider information."

Mar. 16, 2008 - Jim Harper, JD 

"Democratic lawmakers apparently want to ban insider trading by members of Congress and their staffs. Perhaps unsurprisingly, these groups have so far been exempt from the general prohibition against insider trading.

Rather than broadening the ban, however, Congress should repeal it entirely. The ban is problematic on efficiency and equity grounds.

The ban is inefficient to the extent it delays release of relevant information, since this means delayed adjustment of stock prices. Markets cannot allocate resources properly unless they know which companies are doing well or badly.

The ban is inequitable because some corporate executives trade on inside information despite the law. Thus the ban rewards dishonest insiders."

Mar. 28, 2006 - Jeffrey Alan Miron, PhD 

"Given all the problems that demand congressional oversight and activity—the subprime lending mess, Iraq, the Justice Department—it's difficult to see why this far-reaching legislation...is necessary...

[T]he evidence isn't fully convincing. It's hard to believe that the mass of professional and amateur investors are continually outsmarted by shrewd Washington insiders. (It could be, for example, that senators' investments did abnormally well in the 1990s because good brokers and money managers were eager for their business.) Any concern that senators are slinging stocks could be allayed through a system of more or less instant disclosure of trading activity...

Even if Capitol Hill is plagued by widespread trading based on a perceived informational edge, it doesn't require the same sort of insider-trading charges that are filed against Wall Street malfeasants...In insider trading, the connection is direct, and the profit is sure.

But with legislation, the link between advanced knowledge of a senator's position on an issue and the certainty that a specific stock will benefit as a result is much more tenuous...A lot of things can happen: Multiple committees weigh in; there's the possibility of a filibuster or a veto...

The STOCK Act also takes a curious swipe at the First Amendment with its attempt to regulate so-called political intelligence firms...

Think about all the professionals who make their living peddling information about what goes on in Washington: law firms, consultants,...lobbyists, and researchers pitching glorified tip sheets to investors. Oh, and news organizations. The 'political intelligence' shops aren't doing anything much different than, say, the Washington Post, National Journal, or the Wall Street Journal. After all, these companies employ Washington-based operatives who spend their days working government contacts to unearth information that isn't available to the public..."

May 21, 2007 - Daniel Gross, AM 

"In order to enforce [the STOCK Act] you would have to officially make secret, and make confidential, all sorts of meetings and documents. That would require such a fundamental change in our government that I don't think it's going to work."

May 17, 2007 - Anne Mathias, MA