"If a congressman learns that his committee is about to do something that would affect a company, he can go trade on that because he is not obligated to keep that information confidential...He is not breaching a duty of confidentiality to anybody and therefore he would not be liable for insider trading."

Mar. 28, 2006 - Thomas C. Newkirk, LLB 

"The issue is what type of information the representative or staff member has. If the information came from a corporate insider, then the person's status on Capitol Hill makes no difference. If the information relates to pending legislation, then it is in much more of a gray area of the law of insider trading. It is not corporate information, nor is it strictly market information (such as who is buying or selling shares). It is not clear that it is legal or illegal..."

May 3, 2008 - Peter J. Henning, JD 

"Much Congressional trading based on nonpublic information may not violate the securities laws...[T]here are two basic ways in which persons can be held liable for insider trading.

First, an insider of the company -- i.e., a person who is an agent or fiduciary of the company or otherwise a person in whom the company has placed its trust and confidence -- may not trade in the company's stock on the basis of material nonpublic information about the company. Obviously, this basis of liability will rarely apply to Congressmen or the staffers, who will rarely have an employee or other inside relationship with the company.

Second, under the so-called misappropriation theory of insider trading, the defendant need not owe a fiduciary duty to the investor with whom he trades. Nor does he have to owe a fiduciary duty to the issuer of the securities that were traded. Instead, the misappropriation theory applies when the inside trader violates a fiduciary duty owed to the source of the information. But how often will the Congressman or his staffer owe such a duty? Typically, one suspects, the Congressman or staffer will be in an arm's-length relationship with the source of the information, as where it is learned in the course of an investigation. (The misappropriation theory might apply to staffers, if the Congressman for whom they work is deemed the source of the information. In that case, the staffer would have breached a duty to his boss by using the information and thus be liable.)"

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

"Members of Congress are privy to information that affects the market. Few investors are better positioned to know when a new regulation is about to derail a booming business; when a young firm is set to win its first lucrative government contract; or whether a much-debated tax bill will actually become law. House and Senate ethics rules say that lawmakers should not use their offices for improper advantage. But the interpretation of those rules is left to each individual. And there have been almost as many interpretations as there are mutual funds.

An analysis by The Nation of Congressional disclosure reports for 1997, released in mid-June, shows that while some lawmakers avoid buying stock in industries that coincide with their key areas of legislative responsibility--or put their assets into blind trusts--many do not.

In any other government job, they wouldn't have a choice. Food and Drug Administration employees are barred from buying drug company stocks. Energy Department staffers are prohibited from trading in oil companies. But historians say the Congressional ethics rules were designed to permit those with expertise in a certain area to participate in decisions that affect that area..."

July 6, 1998 - Sheila Kaplan, MA