Should Politicians Trade Stocks? Congressional Insider Trading

Insider trading, or the act of buying or selling investments based on nonpublic information, is against the law in the United States and in most countries. At its core, insider trading benefits well connected investors at the expense of the general public and it has been illegal in the US since 1934 – at least for corporate insiders.  I made a video a few months ago on the biggest insider trading scandals, and a lot you asked in the comments section “what about politicians”?The STOCK act was passed in the wake of some controversies over stock trades around the financial crisis of 2007-2008. Its purpose was to stop members of Congress from using non-public information derived from their official positions for personal benefit. In March of last year four U.S. senators (Kelly Loeffler, Dianna Feinstein, James Inhofe & Richard Burr) were accused of using insider information about the coronavirus pandemic to profit in the stock market.  They dumped their stock holdings, including investments in travel companies, while telling the public to remain calm there was nothing to worry about. All four senators denied wrongdoing, insisting that they acted on public information and news reports and not on non-public information that they had received at senators-only briefings. The Senate Ethics Committee and the department of justice, looked into the matter eventually dropping all investigations without finding any wrongdoing.Are things likely to change? Well, a bipartisan group of lawmakers have introduced a bill called the Ban Conflicted Trading Act banning members of Congress and senior staff from buying and selling stocks, most bonds and options contracts. This is intended to prevent lawmakers and high-level staffers from enriching themselves through trades based on potentially market-moving information.Should Politicians Trade?   What should be done about Congressional Insider Trading?Patrick's Books:Statistics For The Trading Floor:  https://amzn.to/3eerLA0Derivatives For The Trading Floor:  https://amzn.to/3cjsyPFCorporate Finance:  https://amzn.to/3fn3rvC Patreon Page: https://www.patreon.com/PatrickBoyleOnFinanceVisit our website: www.onfinance.orgFollow Patrick on Twitter Here: https://twitter.com/PatrickEBoylePatrick Boyle On Finance YouTube Channel Support the show

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This podcast is all about quantitative finance and financial history. Subscribe to hear about financial markets, derivatives, and how investors use quantitative tools from statistics and corporate finance theory. Included are interviews with some of the most interesting thinkers in finance. Occasional longer form financial documentaries, open up fascinating elements of financial markets history. Patrick Boyle is a quantitative hedge fund manager, a university professor, and a former investment banker. To contact Patrick visit http://onfinance.org Find Patrick on YouTube at: https://www.youtube.com/c/PatrickBoyleOnFinance DISCLAIMER:This podcast is not affiliated with any financial institution. The information provided is for entertainment purposes only and does not constitute financial advice. Those seeking investment advice should seek out a registered professional in their home jurisdiction and confirm their credentials on your national regulator's website. Patrick Boyle is not responsible for any investment actions taken by viewers and his content should not be used as a basis for investment or other financial decisions.