Did you see the “60 Minutes” story on insider trading by members of Congress last Sunday? It’s getting a nice afterburn, even among members of Congress who sense a hot-button issue for fed-up voters.
The story, as reported by Steve Kroft, told how Democrats and Republicans in Congress bought or sold stock based on non-public information — usually legislation that would help or hurt some company or industry. Some of the worst abuses came during the 2008 financial crisis, when rumors could drive the market into 300-point swoons in an hour or two.
The main interview was with former congressman Brian Baird (D-Washington), a renegade who authored a bill to crack down on the practice but was only able to get six cosponsors. A version of the bill known as the STOCK Act (Stop Trading on Congressional Knowledge) was reintroduced in March by Congressman Timothy Walz (D-Minnesota). Walz also had a hard time getting support before the “60 Minutes” piece. Prior to November 4th, he had nine consponsors. He now has, as of Thursday, more than 20 supporters including Memphis congressman Steve Cohen, who weighed in with this press release.
As the Washington Post wrote, the original source for uncovering the abuses is Peter Schweizer, whose book came out this week.
I haven’t read it yet but it sounds like good stuff. Anyone who dabbles in the market has the feeling now and then that insiders routinely trade on information that falls into a gray area as far as being “material.” Initial public offerings that start out as private stock are particularly suspect. This is good legislation and good work by Schweizer, “60 Minutes,” and Baird and Walz.