Congressional Insider Trading and the Media

RL Ellison

Someone once remarked Hollywood is all about money and Washington all about power.

Money and power, however, strangely enough, are five-letter words; and when it comes to Washington completely fungible. Money is power. Power is money.

Count the number of lobbyists slurping and slinking around our Capitol. Question: How do you spell money? Answer: Lobbyists. It’s a local joke with non-local consequences.

There is another joke about the golden rule: Whoever has the gold makes the rules. In Washington whoever makes the law has the power. Whoever has the power makes the lucre. Enter from stage crooked trading on insider information.

If you’re Martha Stewart about now you should be not only pissed off but outraged. If memory serves, mostly Martha went to jail for insider trading.  Now Martha is hardly alone, just more profile, more example prone. For those fortunate, elected chosen few who occasionally ambulate through the hallowed halls of our nation’s Capitol, claiming to do some of the public's bidding, insider trading is legal. Wonder how that happened? (Notice we purposely left out ethical. One of the things one learns early on is never bring up ethical and Congress in the same sentence.)

We’ll spare you all those sticky little, boring details, plowing back through decades to the 1950s when legislation defining what constituted insider trading violations somehow omitted Congress. It was, as they say, an accident I’m sure, a brief oversight or cerebral lacunae in attention. That brief oversight, lacunae in attention recently somehow celebrated its well-over-50th birthday. 

As exclusive as this exclusive club is, it’s hardly one of those things that doesn’t get passed around. Just ask the current and the former speakers of the House. What brought all this sleeping-dogs-should-hopefully-stay-left-alone-stuff up is a recent book by Stanford professor Peter Schweiger, Throw Them All Out.

Now the watchdog of the world, our illustrious media, has apparently treated this unseemly subject like a hot potato, taking their cue from a line in a famous Willy Nelson song, “Don’t hold on to nothing too long. Just take what you need and leave….”

Here’s how the Security and Exchange Commission defines insider trading:

Illegal insider trading refers generally to buying or selling a security in breach of a fiduciary duty or other relationship of trust and confidence, while in possession of material, nonpublic information about the security. Insider trading violations may also include ‘tipping’ such information, securities traded by the person ‘tipped’ and securities traded by those who misappropriate such information.

Now we'll leave it up to you to decide if any of that at all is applicable to our august officials in Washington. We'd leave it up to the media, but they've already done what they do best, move on.