海角大神

Is Congress picking stocks with insider information?

Insider trading by members of Congress is legal, according to a '60 Minutes' program Sunday. But there is legislation that would make it illegal.

"It鈥檚 not illegal, but I think it鈥檚 highly unethical, I think it鈥檚 highly offensive and wrong.鈥�
That鈥檚 Peter Schweizer, a researcher at the conservative Hoover Institution at Stanford University, talking about the ability of members of Congress to make trades in the stock market based on inside information they鈥檝e gleaned from their positions on Capitol Hill.

Does that sound unbelievable?

Check out this clip of Schweizer from the "60 Minutes" interview.

The show hits a wide swath of lawmakers, from House Speaker John Boehner (R-Ohio) to House Minority Leader Nancy Pelosi (D-Calif.). Perhaps the most egregious example: Rep. Spencer Bauchus (R-Ala.). Bauchus, who now chairs the House Financial Services Committee, was sitting in meetings with Fed Chairman Ben Bernanke and Treasury Secretary Hank Paulson during the early stirrings of the financial crisis and then making big bets that the stock market would tank.

Isn鈥檛 this already illegal? Amazingly, no, say sponsors of the STOCK Act, a bill that would make it illegal for members of Congress to trade on such information. Here's what from one of the bill鈥檚 sponsors, Rep. Louise Slaughter (D-N.Y.) says:

MYTH:聽 Even if congressional insider trading is not covered by current insider trading laws, congressional insider trading is illegal under other laws.

贵础颁罢:听 In 1958, the House of Representatives adopted the Code of Ethics for Government Service into its Ethics Rules.聽 Clause 8 of the Code of Ethics states that 鈥淎ny person in Government service should鈥�[n]ever use any information coming to him confidentially in the performance of governmental duties as a means for making a private profit.鈥澛� However, this is a House Rule, enforceable only by the House Ethics Committee on an internal basis, and not a law under which a Member or staffer can be prosecuted.聽 Recent years have proven that House Ethics Rules are rarely, if ever enforced.聽 In those cases where they are enforced, Members receive little more than a slap on the wrist.聽 In addition, there is currently no mechanism in place within the House to track and monitor this.聽 If we want to put an end to this practice, we must develop a new law that can and will be enforced.

In addition, the Code of Ethics for Government Service has not been adopted by the Senate and therefore does not apply to Senators or Senate staffers.

Finally, House Rules do not have any effect on those outside of the House. The Code of Ethics for Government Service has no impact on 鈥減olitical intelligence鈥� firms who gather information from Members of Congress or their staffers and share that information with outside investors.聽 In addition to shutting down congressional insider trading by Members and staffers, the legislation will prohibit trading based on information gathered and sold by 鈥減olitical intelligence鈥� firms.

This is not to say that all or even most members of Congress are running around making huge profits off of insider information, as Schweizer - whose book on the subject is being released tomorrow - acknowledges. But the point is, they could be and it wouldn鈥檛 be against the law. 鈥淚t鈥檚 not that I think John Kerry is calling up his broker, on health care, and saying, 鈥楤uy this company, sell that company,鈥欌�� Schweizer says in a Daily Beast piece.

鈥淭he issue is one of a double standard鈥�. The only group in America that we exempt [from insider trading strictures is] politicians, who are probably the last people about whom we should be saying, 鈥極h, we鈥檒l take their word for it.鈥� That鈥檚 what鈥檚 so amazing to me.鈥�

Dig Deeper:
Talk back to Decoder: We want to know what you think about the 60 Minutes piece. Shoot us a line
Read from the Atlanta-Journal Constitution that asks some questions about 60 Minutes鈥� reporting and conclusions.
Check out Peter Schweizer鈥檚 book which details his study further.
Read this that gets into Schweizer鈥檚 claims in more detail.

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