Thursday, June 2, 2011
Call your Congressman for some hot stock tips...
You want strict ethics rules? Start at the top — with the shining example of the noble knights of the House of Representatives, which bans all gifts from lobbyists and imposes a $50 limit on gifts from anyone else. And no, you can’t give an infinite number of $49 gifts to Larry Lawmaker. Sayeth the holy rulebook.
The general provision goes on to state that a member, officer or employee may accept from any other source virtually any gift valued below $50, with a limitation of less than $100 in gifts from any single source in a calendar year. Gifts having a value of less than $10 do not count toward the annual limit.
Okay, so maybe you can give an infinite number of $9.99 gifts, and meals are specifically designated as such. Feel free to make your case to Rep. Portentous over a daily lunch at Arby’s. But still: pretty tight rules, eh?
Except that one thing you can do as a member is study pending legislation and regulatory changes, call up your broker and instruct him to trade on that nonpublic information. Do this as often as you want; you will suffer no penalty. There is no limit to how much money you can earn on insider trading in the House or Senate. Lawmakers and their staffers are specifically exempted.
As you might expect, those who work in the hallowed halls are not shy about availing themselves of the opportunity. A Wall Street Journal analysis published more than six months ago that has thus far provoked no particular sense of shame on Capitol Hill found that at least 72 Congressional aides in both parties had recently traded shares of companies that their bosses helped regulate. In 2009, while Senate Banking Committee member Mike Crapo, a Republican from Idaho, was involved in discussing “stress tests” on banks such as Bank of America, his aide Karen Brown traded the company’s stock on several occasions in the weeks before May 7, 2009 — when BofA surged thanks to a press release on its stress-test result, assuring Ms. Brown a nifty profit.