Senators to Propose Ban on U.S. Lawmakers, Executive Branch Members Owning Stock

At the most basic level, I worked for a company that wouldn't let you sell company stock, even as a non-executive, during a window around earnings being reported.

The wife may have knowledge about $bigco buying or selling $bigthing, and the husband may gain that same knowledge from her, even if she's honest and never intentionally disclosed it. (people aren't perfect and clues can slip, or he simply has access to her laptop or that scratch pad where she wrote down the essentials of a phone call etc.

It's relatively minor, but it's still legal repercussions.

It's not really a legal obligation as such ("only" putting the job at risk), but it does cover rather a lot of jobs.

When I worked in finance, myself and my wife also had a lot of restrictions in regards to our investments.

Anyways, these are just a few examples, but there are a lot of domains of activity where restrictions extend not only to the direct employee but also to their spouse or direct family.

For us, it was easier to avoid making stock transactions that triggered reporting and avoid accepting gifts that would trigger reporting, than to fill out the reports. I had equity based compensation that had to be reported, but then everything else went into diversified mutual funds, which is a good idea anyway.

[1] See CA form 700. But note, this doesn't apply to federal elected officials from CA, only to state and local officials.

Just one off the top of my head - my friend works for the lottery so he nor his immediate family can buy lottery tickets.

This is the requirement the GOP had for Jimmy Carter.

You can see the backtest performance here, but the holdings and advanced metrics are behind a paywall (apologies in advance): https://www.quiverquant.com/strategies/

As others have pointed out, there is a delay between when the trades are made and when they are disclosed and our strategy is able to act on them.

However, this is somewhat countered by the fact that politicians tend to hold stocks for long periods of time.

There are definitely some examples of politicians trading a stock right before a massive market moving event, but I think they are generally looking at a longer time horizon when they are investing.

* Congress members don't get paid much and like money.

* They are often old with healthcare issues. Their govt health plans are not great.

* They maintain two residences, one in DC and one in their home state. AOC rents an apartment in NYC that she never lives in and one in DC. This is a huge expense.

Closing this privilege might have other unintended effects... Only the very wealthy can afford to be in Congress.

https://www.sciencedirect.com/science/article/abs/pii/S00472...

> We find no evidence of superior investment performance whether we look in aggregate or at Senators specifically accused of informed trading. Over a six-month horizon, stocks bought by House Members underperform on average by 26 basis points, while stocks sold underperform by 11 basis points.

You can search for individuals on top to see their full transaction list. Lummis bought up to $100K of Bitcoin in 2021: https://www.quiverquant.com/congresstrading/politician/Cynth...

It's really hard to prove someone traded off of insider information if they make a decision to buy/sell for themselves. If they don't tell anyone else why they made the trade, you don't really have any proof that it was made off of material non-public information.

If a congressman is forced to ask someone else to trade for them, they might be careless and you might be able to find evidence via text messages or phone records.

The last time a U.S. Representative got convicted for insider trading, it was because he called his son to tell him to trade a stock that he had insider information on: https://www.justice.gov/usao-sdny/pr/former-congressman-chri...

https://wibc.com/154888/climate-czar-john-kerry-throws-wife-....

New barriers include: the actual work of moving money around to and from friends and family and directing trades, counterparty risks in doing so (e.g. sibling dies and leaves money to someone else or takes the money and runs), tax complications, or reputational risk if found to be violating "spirit of the law" that might harm election odds. There are surely more frictions and barriers like these that I'm not capturing.

Meanwhile, her husband is a VC, and probably makes a good deal of money for them as well.

They're generally incentived to keep all 3 indexes up.

If the politicians manage the process correctly, they can forever be passing "reform bills" which sound good...but have enough loopholes so that nothing resembling actual reform ever happens.

Rule of Thumb: If somebody claims they want to build a transportation system, then starts with a square wheel and talks about improving it as the next step - then either [1] they're teaching, and it's only a pedagogical exercise, or [2] they are lying about wanting to build a transportation system.

No, it's not.

It's just the latest in a long line of campaign finance reform --- most of which is ineffective because it was purposely designed from the get-go to be easily circumvented.

The open secret here is that you're counting on an organization (Congress) to police itself.

This makes no more sense than an counting on Congress to avoid raising it's own pay. How has that worked out?

If you know in advance what position someone is going to take, then, logically they have already taken the position (otherwise, how would you know with certainty what position they're going to take?.

This isn't mere wordplay; the practical consequence is that even if you knew in advance how they would vote on a particular decision (maybe you're definition of "position they plan to take"), you should assume they have also already made other steps to take advantage of that public knowledge. If my reasoning is correct, then I don't know that your proposal would make too much of a dent in the (safe to assume) "insider trading" that's happening.

So I think a better policy would be to be ban trading altogether for these folks, because that would also disincentivize people from pursuing these careers for extreme profit.

If so, it really helps frame just how messed up this system is.

And also all the state and local governments are heavily depending on equities to deliver major gains to fulfill their deferred compensation for government employees (otherwise they have to increase taxes to make up for lack of any performance), so the more state and local tax you pay or are able to pay, the more invested you are in backstopping the markets also.

That’s patently false. Nancy Pelosi is no longer Speaker of the House.

The former Speaker of the House’s husband was the one doing all that.

It is absolutely possible for a new imperfect system to be worse than the imperfect system that it replaces.

The fact is that there are a lot of jobs that, at a minimum, place a lot of restrictions on the purchases and sale of stock of individual companies. (Many journalists and analysts for example.)

Or are we saying that a person in congress is not allowed to start a business?

Is the CEO of Tesla (~50B ?) really more impactful than the US president (~400k/yr) ?

I think if we raised salaries your sentiment could work, but good luck with that.

Want to compete with legacy auto? Want to compete with Google? Hmm, lets think of all the new regulations that you might have to meet. There are perverse incentives even in that system.