Skip to main content

Hi folks. I wanted to come here and follow-up on the story of possible insider-trading in Congress. Remember a few weeks ago I mentioned that I was hearing stories about possible insider trading by Tom DeLay's top leadership aide in Congress? Well today I am going to introduce legislation with my colleague Rep. Brian Baird of Washington that will block Members of Congress and their aides from engaging in insider trading.  We can't let Members and their staffers making profits through day-trading using  non public, sensitive information they become privy to because of their special access.

The Wall Street Journal has a major story this morning on their front page.  It's subscription based so here are excerpts on our legislative effort to curb insider trading in Congress:
Amid broad congressional concern about ethics scandals, some lawmakers are poised to expand the battle for reform: They want to enact legislation that would prohibit members of Congress and their aides from trading stocks based on nonpublic information gathered on Capitol Hill.

Two Democrat lawmakers plan to introduce today a bill that would block trading on such inside information. Current securities law and congressional ethics rules don't prohibit lawmakers or their staff members from buying and selling securities based on information learned in the halls of Congress.

It isn't clear yet what kind of support the bill will garner from Republicans. But its prospects are enhanced by the current charged environment in Congress; lawmakers from both parties in both houses have placed a high priority on passing ethics and lobbying-reform legislation. Such legislation would provide a vehicle to which proponents could attach a measure on stock trades.

In addition to banning trading on inside information, the proposal would require that lawmakers and their top aides disclose within 30 days any stock trades. Congressional rules now require lawmakers to disclose their trades once a year. The bill also would require that companies register with Congress if they sell information about congressional activity to Wall Street investors.

Unlike members of Congress, executive-branch employees already are banned from trading on inside information. Employees of several federal agencies are prohibited from investing in companies that have business before them. In 1934, for example, Congress banned Federal Communications Commission employees from owning stocks or bonds in telecommunications or broadcast companies.

Again just why did we introduce this legislation?:
The two Democrats who wrote the bill say they were motivated by the trading activity of a former top aide to Rep. Tom DeLay, the onetime Republican majority leader in the House. The aide, Tony Rudy, bought and sold hundreds of stocks from his computer in the U.S. Capitol in 1999 and 2000, according to financial-disclosure forms and other DeLay aides.

[...]

It is difficult to tell how much Mr. Rudy profited on particular trades. House financial statements require disclosure of stock trades only in broad ranges. Mr. Rudy bought each of his stocks for between $1,001 and $15,000 and sold them in the same ranges.

But Mr. Rudy's net worth grew from 1999 to 2000. Mr. Rudy and his wife were at least $49,000 in debt at the end of 1999, according to his disclosure form. They owned no more than $1,000 in stock and reported a student-loan debt between $50,001 and $100,000.

At the end of 2000, Mr. Rudy and his wife reported assets between $6,007 and $91,000. Their student-loan debt was between $30,002 and $100,000.
I would encourage you to pick up a hard copy of the Journal today so that you can read the entire article.

There are few issues here that are deeply troubling to us.  First, there is a huge problem with a senior leadership staffer spending his days making stock trades instead of serving the people he is supposed to represent, as seems to have been the case with Mr. Rudy. This represents yet another compromise of the integrity of this leadership and another failure to impose accountability where it should have been already.

Second, we need to find out whether or not Mr. Rudy was trading on sensitive nonpublic information he gained while working in Congress. More than likely only a full investigation could bear that out.

Of course the deeper issue here is the vast potential for abuse. The possibility that members of congress and their staffs could use information not available to the public to make money in the stock market is very real. The fact that entire political intelligence firms exist for the sole purpose of garnering such information and trading on it suggests it happens more than any of us have ever imagined.

The bottom line is, at the very least, individuals with access to non-public government information should be held to the same standards as any other American. There is a gaping hole in the law and it needs to be closed. People should come work in Congress to serve their country, not to enrich themselves.

That is why we are introducing this bill today, which will bring those standards in line and give the SEC the power to enforce insider trading in Congress. It will also require reporting by members and staff on the trades they make, infusing some accountability into the process. Rep. Baird and I are going to file this legislation today.  I will come on here and share the text of the legislation after we have filed it in the House. I sure hope my colleagues from the other side of isle will join this effort to end insider trading in the People's House.

Also, if there  are any of you in this community who are expert day-traders or know a lot about this kind of market activity, we would be really interested to hear your thoughts and feedback on this.  What other avenues can we pursue to get more information on Mr. Rudy's day-trading activities on the Hill?

Thank you again for making me a part of this wonderful community.

-LMS

Originally posted to Rep Louise Slaughter on Tue Mar 28, 2006 at 08:19 AM PST.

EMAIL TO A FRIEND X
Your Email has been sent.
You must add at least one tag to this diary before publishing it.

Add keywords that describe this diary. Separate multiple keywords with commas.
Tagging tips - Search For Tags - Browse For Tags

?

More Tagging tips:

A tag is a way to search for this diary. If someone is searching for "Barack Obama," is this a diary they'd be trying to find?

Use a person's full name, without any title. Senator Obama may become President Obama, and Michelle Obama might run for office.

If your diary covers an election or elected official, use election tags, which are generally the state abbreviation followed by the office. CA-01 is the first district House seat. CA-Sen covers both senate races. NY-GOV covers the New York governor's race.

Tags do not compound: that is, "education reform" is a completely different tag from "education". A tag like "reform" alone is probably not meaningful.

Consider if one or more of these tags fits your diary: Civil Rights, Community, Congress, Culture, Economy, Education, Elections, Energy, Environment, Health Care, International, Labor, Law, Media, Meta, National Security, Science, Transportation, or White House. If your diary is specific to a state, consider adding the state (California, Texas, etc). Keep in mind, though, that there are many wonderful and important diaries that don't fit in any of these tags. Don't worry if yours doesn't.

You can add a private note to this diary when hotlisting it:
Are you sure you want to remove this diary from your hotlist?
Are you sure you want to remove your recommendation? You can only recommend a diary once, so you will not be able to re-recommend it afterwards.
Rescue this diary, and add a note:
Are you sure you want to remove this diary from Rescue?
Choose where to republish this diary. The diary will be added to the queue for that group. Publish it from the queue to make it appear.

You must be a member of a group to use this feature.

Add a quick update to your diary without changing the diary itself:
Are you sure you want to remove this diary?
(The diary will be removed from the site and returned to your drafts for further editing.)
(The diary will be removed.)
Are you sure you want to save these changes to the published diary?

Comment Preferences

skybluewater, David Nir, Greg Greene, thirdparty, N in Seattle, Frederick, fly, selise, Alumbrados, buffalo soldier, Marek, Ducktape, piro, Phoenix Woman, Kelk, SarahLee, jmelli, carlwithak, Adam B, joejoejoe, mini mum, Hollywood Liberal, ubikkibu, jimpol, Mike Stark, demnomore, Murshed Z, saraswati, Alan S, HoneyBearKelly, lebowski, Shockwave, Del C, Sherri in TX, cotterperson, meg, democat, jennen, shayera, OLinda, figdish, LeftHandedMan, ortsed, lilorphant, voltayre, zic, pollyusa, bumblebums, mataliandy, exNYinTX, redtravelmaster, msstaley, davelf2, memberofthejury, shermanesq, Disgusted in St Louis, concernedamerican, emmanuel, kwinz, bronte17, CoolAqua, jn2375, EricS, pessullivan, DickCheneyBeforeHeDicksYou, sadhu, wonkydonkey, understandinglife, Ti Jean, Baldwiny, Loquatrix, Rupert, Glic, Scoopster, Patricia Taylor, repeat, edderh, buckhorn okie, mrblifil, chimpy, chechecule, Prove Our Democracy with Paper Ballots, michelle, paulucla, peraspera, L0kI, standingup, Fe, juergendopp, ryder92111, erquirk, Gonzophile, splashy, Cedwyn, antirove, Alna Dem, sidnora, Georgia Logothetis, suzq, SneakySnu, hopesprings, sockpuppet, missliberties, bogdanmi, bekenbauer, SKB, DaveinMinneapolis, gmb, roseeriter, TXsharon, besieged by bush, bloomster, baxxor, cosette, smash, Caldonia, DEFuning, roselynde1, NYFM, Black Maned Pensator, joodleboodle, snakelass, btyarbro, rockhound, Mrcia, DriftawayNH, lecsmith, Earl, Ulysses1, dcookie, walkshills, seaside, parkslopper50, ybruti, WV Democrat, mattes, mungley, PlayByTheRules, NapaJulie, Marianne Benz, Steven D, HK, DarkSyde, DrewDown, zannie, kd texan, snowbird42, bibble, Timroff, califdweller, Limelite, sawgrass727, Gowrie Gal, memophage, ebbinflo, seronimous, rapala, MichDeb, vcmvo2, Skennet Boch, joanneleon, Los Diablo, cgrkumar, Fiction59 Fool On The Hill, Bluesee, Harkov311, pattyp, champlain, Gabriele Droz, Elise, Alegre, coloradobl, LarisaW, lakid1995, Pandemoniac, Alice Marshall, alex hill, melindafla, sotony, PBen, KnotIookin, Alien Abductee, Webster, panicbean, station wagon, ChemBob, DC Brewin, bluestreet, Tod, Shuvo Dutta, Unforgiven, Mz Kleen, curtadams, IL dac, majcmb1, Frank Palmer, concerned, jorndorff, jimreyn, dunderhead, Overseas, libbie, Sandino, dspivak, palachia, Zergle, neroden, wiscmass, sbdenmon, Shaking the Tree, willers, Spathiphyllum, Blakbelt, huttotex, Land of Enchantment, melvin, lgmcp, Reality Bites Back, Strawberrybitch, martini, Testwizard, trashablanca, PoppyRocks, kraant, tommymet, Keone Michaels, TakeBackTheHouse, BlueInARedState, Russgirl, dragon695, Arclite, Ellicatt, mooshter, Dvalkure, Truza, buhdydharma, Boojum68, Jordan LFW, Esjaydee, Wary, srvaughn, cider drinker, TalkieToaster, jguzman17, global citizen, Lashe, Ashaman, HammClov, condoleaser, KbThorn In Massachusetts, Hells Bells, BalkanID, MO Blue, blitz boy, pomonademocrat, Dreaming of Better Days, Strategically Yours, kurt, chapel hill guy, PurityOfEssence

Subscribe or Donate to support Daily Kos.

Click here for the mobile view of the site