In October 2010 I wrote a post here entitled, "Groundhog Day: The Congressional Insider Trading Cycle." I described the cycle as follows:
- Article in financial press about recent apparent insider trading by members of Congress or their staff, which also notes that insider trading by Congress actually falls through the cracks of what is illegal under the law.
- Follow-up articles by more mainstream publications expressing shock--shock!--that our esteemed representatives in Washington, DC are not subject to insider trading laws like the rest of us.
- Proposed legislation by Rep. Brian Baird (D., Wash.) and Rep. Louise Slaughter (D., N.Y.) called the “Stop Trading on Congressional Knowledge Act” (the STOCK Act) that would explicitly make it illegal for members of Congress and their aides to trade stocks and other securities based on inside information obtained from the legislative process.
- Deafening silence and lack of support from the rest of Congress on the STOCK Act lead to the Act going nowhere ( a total of six congressmen supported the most recent iteration of the STOCK Act).
- Wait 12 months and repeat entire process.
Well, almost exactly 12 months have passed since October 2010, and guess what?! It is time for the media to jump back on the issue of Congressional insider trading. This time, however, some heavy artillery is on the way. The Caucus blog of The New York Times reports that some members of Congress are bracing for an upcoming piece by CBS' "60 Minutes" on whether "their influence and control of legislation gives them a leg up in playing the stock market and making other investments."
Specifically, the Caucus reports, 60 Minutes' Steve Kroft appeared at news conferences held by Speaker John A. Boehner and Representative Nancy Pelosi to ask them about this topic and specific trades made in their accounts. The program's website alludes to an upcoming report by Kroft "on how America's lawmakers can legally buy stock based on non-public information" and the Caucus states that congressional aides have been alerted that the story will air this coming Sunday.
In addition to the upcoming 60 minutes segment, a CNBC interview this week with Jack Abramoff provides more fuel for the fire. Abramoff, a lobbyist who was convicted of mail fraud and conspiracy in 2006, said that about a dozen members of Congress and their aides engaged in insider trading based on market-moving information they learned on Capitol Hill. Many of them, Abramoff said, bragged about this to him while dining at his restaurant in D.C. He recalls that some members of Congress told him they made hundreds of thousands of dollars from their insider trading. "I think it was pretty widely known and it is pretty widely known that it is going on," Abramoff told CNBC.
So come Sunday, we will be firmly in step 2 of The Congressional Insider Trading Cycle. I look forward to seeing this year's version of the STOCK Act, and will prepare myself for the deafening silence that is sure to follow it. See you again in 12 months!