insider

There’s a growing bipartisan push to prohibit members of Congress from buying or selling stocks. The shift follows news reports that several senators sold stocks shortly after receiving coronavirus briefings in early 2020 and that at least 57 lawmakers have failed to disclose financial transactions since 2012 as required by law. Congress passed that law – the Stop Trading on Congressional Knowledge Act, also known as the STOCK Act – in 2012 to fight insider trading among lawmakers with increased transparency. But a chorus of legislators and governance watchdogs argue that it didn’t go far enough and isn’t working. All this raises two important questions: What exactly is insider trading and what’s the big deal? We are a finance professor and an economics professor who have been studying ...

Recent allegations regarding stock trading by members of Congress in the midst of the COVID-19 pandemic have raised calls for the investigation of these politicians for illegal “insider trading.” But successfully prosecuting such cases will be very difficult. Even federal judges struggle with writing clear instructions to lay jurors in insider trading cases. Often, verdicts are reversed on appeal due to errors in explaining complicated legal terms. There are two different provisions of law that could apply to the trading activity of senators and congressional staff. Members of Congress and staff could run afoul of either or both of these laws. But proving a violation and convicting them is not likely. Stock Act and securities law The first provision is a rule known as Rule 10(b)(5) afte...

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Insider Trading – What It Is And Why It’s A Big Problem

Insider trading by members of Congress may be difficult to prove