re: Insider Trading: Is it really that bad?

quote:

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2) US Senators and Congressmen are exempt from insider trading regulations even though they pass laws affecting companies.

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From what I've read this is technically not accurate. It depends on how you define "inside" information.

Congressmen and their staffers know what is in a appropriation bill, for example, which will affect a company's stock. But that information is not "inside information" from inside the company. The information is supposedly "public" since appropriation hearings are public.

If congressmen receive information from a corporate insider and they buy or sell based on that inside information, the congressman can be prosecuted under insider trading laws just like anyone else.

But I agree with your point, that congress has an advantage over the average investor just because of the information that person receives just from being a congressman.

My solution would be congressman must publicly announce at least 5 business days in advance what stocks he is going to buy or sell before he actually buys or sells it. The announcement should be published online.

I predict we won't see a law requiring that....