Alan J. Ziobrowski, PhD Biography

"With respect to H.R. 682 [Stop Trading on Congressional Knowledge Act], I confess I am neither an attorney nor am I an expert on insider trading. That having been said, I am generally supportive of making insider trading illegal for members of Congress and their staffs. It is likely to have some positive effect. However, historically speaking, convicting an individual of insider trading has always been a difficult task... In my view, the vast majority of insider trading goes undetected as evidenced by the fact that corporate insiders continue to earn significant abnormal returns despite the best efforts of the SEC to monitor their trading activities. Thus I am doubtful that making insider trading by members of Congress illegal will eliminate the problem."

[Editor's Note: Prior to Dr. Ziobrowski's July 13, 2009 Con position state made above, his position was Not Clearly Pro or Con allowing insider trading as indicated in his May 2005 article below.]

"'Senators' stocks beat the market by 12%' blared a headline in the Financial Times. So what? Isn't beating the market what everyone tries to do?... Like corporate executives, senators also have access to valuable inside information. They are aware of likely changes in the tax laws, government contracts, research funding, trade negotiations, etc. Any of these may have profound ramifications for the various companies or industries involved. In addition, those in Congress have the power to help or hurt individual companies and industries by changing the laws. This also can impact share price.

Unlike corporate executives, congressmen can trade common stocks without restriction, buying and selling as much as they want whenever they want. They may vote on issues in which they have a personal financial interest. Furthermore, Senate members are not required to report their transactions to the Securities and Exchange Commission like corporate insiders...

In fairness, just because they have the power to earn 'unfair' profits in the stock market does not necessarily mean they use it. Two-thirds of senators do not trade stocks at all and, so far, not a single member has admitted trading stocks based on confidential information he or she obtained on the job. The evidence, however, is rather compelling. In beating the market by 12% per year, the chance that they merely are lucky is very small."