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Democrats Attempt to Gut the Insider Trading Bill
CNBC.com | November 30, 2011 | 02:57 PM EST

What exactly is Kirstin Gillibrand thinking?

The Democratic senator from New York has proposed a new version of a bill to outlaw insider trading by members of Congress that would, in effect, make it completely legal for members of Congress to engage in insider trading. In other words, it does the opposite of what it the bill intended to do.

There is very good reason to believe that House members and senators engage insider trading. A 2004 study of the results of stock trading by U.S. senators found that that, on average, they beat the market by 12 percent a year. U.S. households on average underperform the market by 1.4 percent.

A study published this year found that House members also outperform both the market, although only by 6 percent a year.

Then we have the words of notorious Washington lobbyist Jack Abramoff to CNBC’s Eamon Javers. The former lobbyist said the amounts members of Congress earned trading off their inside knowledge ranged from as little as $2,000 to as much as "several hundred thousand dollars," that was claimed by one member of Congress. Abramoff declined to name names:

"It was more, 'Look at me, I'm a real great stock trader,'" Abramoff told CNBC of the congressional bragging. "All of a sudden somebody from a background maybe in law, maybe in some other unrelated business area, all of a sudden is picking winners and losers in the market."

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