Insider Trading - Senators profiting from information

[tampaite]

so we all heard Sen. Kelly Loeffler who dumped millions in stocks THE SAME DAY after a private(secret), all-senators meeting on the novel coronavirus.

https://www.thedailybeast.com/sen-kelly-loeffler-dumped-millions-in-stock-after-coronavirus-briefing

Sen. Kelly Loeffler (R-GA) reported the first sale of stock jointly owned by her and her husband on Jan. 24, the very day that her committee, the Senate Health Committee, hosted a private, all-senators briefing from administration officials, including the CDC director and Anthony Fauci, the head of the National Institute of Allergy and Infectious Diseases, on the coronavirus.
Thread is NOT about politics BUT it's about how to ensure that politicians(or anyone holding an office with access to private information) do not profit from insider trading.

Is there a ballot initiative on the November ballot that requires ALL politicians(at local, state and national level) to hold their equities in Index funds ONLY until they are in office?

[OtherJen]

She also bought stock in a company that provides teleworking services. She knew exactly what was coming, as did Sen. Burr, and they happily lied to their constituents. Martha Stewart was convicted and imprisoned for a transaction with far less significant effects.

[bilmar]

What shocked me about this story was not that a politician would cheat the system but that apparently the New York Stock Exchange allows the wife of its chairman to trade stocks - WTF!

You would think that none of senior management would be allowed to trade stocks at all.

[erutio]

I'm so far on the left that you could almost call me the S word.  However, does this really count as insider trading?  By the last week of january, all of this information about the coronavirus was widely available.

[John Galt incarnate!]

 However, does this really count as insider trading?  .

No.

"Insider trading is only illegal when the information is ‘material,’ meaning that it would have caused a significant change in stock price. It is also only illegal when the information is known by the trader and is not public."  Renato Mariotti, former federal prosecutor

"I relied solely on public news reports to guide my decision regarding the sale of stocks on February 13." Senator Burr

 Senator Burr  can credibly argue that the sale of his stock was based on information available to the public.

Senator Loeffler's  stocks were sold by "multiple third-party  advisors"  without her or her husband's "knowledge or involvement."

[HPstache]

Didnt we kind of all know about Coronavirus too?  We all (well most of us) just chose to stay in the market and not to time it.

[John Galt incarnate!]

Didnt we kind of all know about Coronavirus too? We all (well most of us) just chose to stay in the market and not to time it.

Yes, pretty much so.

And of course  I know  I am not a stock-market seer or possessed of some kind of stock-market prescience.

I did though, post that the virus may spur a sell-off or a panic (I don't remember which) because stocks  have been up, up, up, for a long, long time.

When I posted I didn't think that the COVID-19 outbreak would get as bad as it has.

Nor did I think stock markets would  decline as much as they have or  undergo the extraordinary volatility of recent weeks.

Keep your seat belts fastened.

And above all else, stay safe from the virus.

[martyconlonontherun]

It will be impossible to pin it on them but hopefully this buries them politically. They had real Intel this was going to be bad and not just newspaper articles while trump was saying it won't be bad.

[Travis]

 However, does this really count as insider trading?  .

No.

"Insider trading is only illegal when the information is ‘material,’ meaning that it would have caused a significant change in stock price. It is also only illegal when the information is known by the trader and is not public."  Renato Mariotti, former federal prosecutor

"I relied solely on public news reports to guide my decision regarding the sale of stocks on February 13." Senator Burr

 Senator Burr  can credibly argue that the sale of his stock was based on information available to the public.

Senator Loeffler's  stocks were sold by "multiple third-party  advisors"  without her or her husband's "knowledge or involvement."

Burr attended an intelligence briefing on the virus, a few days later wrote an article and gave an interview saying the US would be fine, made a large stock sale, and then told a small group of people the virus was going to be a big problem.  I don't see how you can argue he was acting on "information available to the public" when as a member of the Intelligence and Health committees he was one of the people providing that information to the public.

[HPstache]

Let's take a trip down memory lane and look how people were feeling about the seriousness of COVID-19 in late January despite lots of strong warnings in the thread:

https://forum.mrmoneymustache.com/investor-alley/coronavirus-what-are-you-doing-with-your-investments-401ks/

There is literally someone on the first page posting second hand experience from Wuhan (insider info that most wouldn't have) and everyone is poo poohing it... even some of the strongest voices that are now voicing opposite sentiments.

The truth is we did all have an idea that this could be serious, and we all chose not to touch our portfolios like good mustachians.   How many times has this Senator tried timing the market on his feelings and gotten it wrong?  We are just all up in arms because this time he got it right.  Do I think what he did is super sketchy?  Yes.  But do I think that most people plugged into world events even so slightly could have made the same call, including us here at MMM?  Yes.

[Zamboni]

Hang 'em high.

[erutio]

Wuhan shut down on 1/23, so it was morning of 1/22 for us.  So, yeah....this is the wrong type of news to spred.

[moneypitfeeder]

Let's take a trip down memory lane and look how people were feeling about the seriousness of COVID-19 in late January despite lots of strong warnings in the thread

I really wish I had read this thread, it went completely under my radar. All of my accounts have plummeted in the past 2 weeks, I really wish I had paid attention and re-allocated, but now I'm in it for the long haul and hoping certain investments come back up.

[frugalnacho]

Let's take a trip down memory lane and look how people were feeling about the seriousness of COVID-19 in late January despite lots of strong warnings in the thread

I really wish I had read this thread, it went completely under my radar. All of my accounts have plummeted in the past 2 weeks, I really wish I had paid attention and re-allocated, but now I'm in it for the long haul and hoping certain investments come back up.

Did you see the one about brexit? Or Trump getting elected? Or a hundred others related to Trump? Or Russian collusion? Or the one about my grandma farting?

You can find threads claiming the end of the stock market on a consistent basis for a million reasons. Lots of people took those reasons seriously and sold off and missed out on subsequent market gains because none of those things caused a crash.  Most of us had no clue how serious the coronavirus outbreak was going to be.  I know I didn't and I'm in that thread totally not taking it seriously.  It's only in retrospect after it happened that it all became clear to me.  People are still trying to time the market in the middle of this.  I still have no fucking clue what the market is actually going to do. I'm sure a month from now it will be painfully obvious, but right now it's not. Is it going to drop more? Start recovering? I'm under no illusion about how bad this thing is, but is it worse than the 1918 pandemic? Or the great depression? Or either world war? Even if it is does than mean another 20% drop? Or will it jump 20% next week and just hang out at that level? I don't know and I'm skeptical anyone does.

[Cranky]

I read the NYT every day. There were articles about COVID and Wuhan from the beginning of January, honestly. There are things that surprise me, but this isn’t one of them.

[Michael in ABQ]

There are many more egregious examples of members of Congress profiting from inside information. It's not even illegal as they were sure to carve out exemptions for themselves. It's just that most of them are very difficult to prove and there's zero interest for them to police themselves as everyone is in on it. It wouldn't do to accuse someone else of an ethics violation and have it backfire on you.

Frankly, I think two months ago most of us could have received the same information in that briefing and decided it was not worth acting on. I have a security clearance and most of the secret and top secret information I've seen is pretty underwhelming. It's usually just a more detailed version of the unclassified information.

[Jack0Life]

Let's take a trip down memory lane and look how people were feeling about the seriousness of COVID-19 in late January despite lots of strong warnings in the thread

I really wish I had read this thread, it went completely under my radar. All of my accounts have plummeted in the past 2 weeks, I really wish I had paid attention and re-allocated, but now I'm in it for the long haul and hoping certain investments come back up.

Did you see the one about brexit? Or Trump getting elected? Or a hundred others related to Trump? Or Russian collusion? Or the one about my grandma farting?

You can find threads claiming the end of the stock market on a consistent basis for a million reasons. Lots of people took those reasons seriously and sold off and missed out on subsequent market gains because none of those things caused a crash.  Most of us had no clue how serious the coronavirus outbreak was going to be.  I know I didn't and I'm in that thread totally not taking it seriously.  It's only in retrospect after it happened that it all became clear to me.  People are still trying to time the market in the middle of this.  I still have no fucking clue what the market is actually going to do. I'm sure a month from now it will be painfully obvious, but right now it's not. Is it going to drop more? Start recovering? I'm under no illusion about how bad this thing is, but is it worse than the 1918 pandemic? Or the great depression? Or either world war? Even if it is does than mean another 20% drop? Or will it jump 20% next week and just hang out at that level? I don't know and I'm skeptical anyone does.

I agree with you to a point.
I remembered when someone posted a thread about what to do about the Virus way early. I was one of the skeptical one. But if you kept follow the situation closely, you saw this coming.
I started taking this serious when The entire city of Wuhan shut down and so did a lot of China. I said to myself even if by some miracle it didn't get over here, China is a big supply chain for the US and that surely will affect us.
Maybe its because I work in a hospitality industry and that forced me to pay attention more closely. We get a lot of foreign travelers. Logic told me it was just a matter of time before somebody brought it back to the US. Our border was far from closed.
I told all my workers that as soon as we get our 1st case in our city, our entire company will shut down. Nobody took it serious. Our state first confirmed case was Mar 1st. We shutdown Mar 13th. Probably won't reopen till May.
NO, I'm no genius that can guess the future but I do apply logic in my everyday life and my instinct said this was going to happen. Lucky guess, I suppose.

Looking at the current situation, we are in our first week of a soft shutdown. Surely it will get worst before it gets better. The chain reaction is not in full effect yet. Laid offs, unemployment, businesses shutting down, etc....
I don't think "the low is in" is as best as I can put it.
.

[John Galt incarnate!]

There are many more egregious examples of members of Congress profiting from inside information. It's not even illegal as they were sure to carve out exemptions for themselves. It's just that most of them are very difficult to prove and there's zero interest for them to police themselves as everyone is in on it. It wouldn't do to accuse someone else of an ethics violation and have it backfire on you.

The power to steer funding is also a lucrative congressional advantage.

Former Speaker of the House Dennis Hastert bought farmland near the site of a proposed highway.

The farmland would be much more valuable if it could be accessed from the highway.

Eventually Hastert earmarked funding for the highway.

 Hastert pocketed $millions from the increased value of the farmland.

[Travis]

Tucker Carlson of all people is calling for Burr to explain himself or resign.

[stronk]

Tucker Carlson of all people is calling for Burr to explain himself or resign.

I couldn't believe this either hahaha.

[Roland of Gilead]

I saw the virus was having a negative effect in late Jan and posted about it on here in the Top is In thread that I was buying (did buy) puts on SPY when it was 335 (they were silly cheap, like $3 for a March 20, $325 put).   I didn't need insider trading to see that things were getting bad.

[Buffaloski Boris]

This virus was known about in early January and I remember hearing about it at that time. There is all sorts of “end of the world” sorts of information out there at any given time. The vast bulk of it is over dramatized baloney. Once every blue moon it isn’t. That someone reads the same tea leaves better than most of us did doesn’t make them unethical.

[Paper Chaser]

I wonder how often people in power do stuff like this and it ends up backfiring but not making the news? Would it be just as bad if these politicians had sold their stock but the market didn't tank? Of if they sold stock during the election in 2016, and lost out on gains?
Are we mad because they took advantage of their position and access, or are we mad because they happened to time it right and avoid losses like the rest of us? Seems like most people are upset, and this is in the news, only because it worked out for the politicians in this case.

[former player]

I wonder how often people in power do stuff like this and it ends up backfiring but not making the news? Would it be just as bad if these politicians had sold their stock but the market didn't tank? Of if they sold stock during the election in 2016, and lost out on gains?
Are we mad because they took advantage of their position and access, or are we mad because they happened to time it right and avoid losses like the rest of us? Seems like most people are upset, and this is in the news, only because it worked out for the politicians in this case.

The politician's profit was at the expense of the person they sold to and didn't have the same knowledge.  That's the problem.

[Paper Chaser]

I wonder how often people in power do stuff like this and it ends up backfiring but not making the news? Would it be just as bad if these politicians had sold their stock but the market didn't tank? Of if they sold stock during the election in 2016, and lost out on gains?
Are we mad because they took advantage of their position and access, or are we mad because they happened to time it right and avoid losses like the rest of us? Seems like most people are upset, and this is in the news, only because it worked out for the politicians in this case.

The politician's profit was at the expense of the person they sold to and didn't have the same knowledge.  That's the problem.

Right, but if it had been the other way around, and the buyer had made out instead of the seller, it's not in the news and we'd likely never even hear about it. That implies that the use of insider info is not what makes this a problem for many people. It's only in the news because they made money on the transaction (or more accurately, didn't lose as much as the rest of us). Misery loves company after all.

[former player]

I wonder how often people in power do stuff like this and it ends up backfiring but not making the news? Would it be just as bad if these politicians had sold their stock but the market didn't tank? Of if they sold stock during the election in 2016, and lost out on gains?
Are we mad because they took advantage of their position and access, or are we mad because they happened to time it right and avoid losses like the rest of us? Seems like most people are upset, and this is in the news, only because it worked out for the politicians in this case.

The politician's profit was at the expense of the person they sold to and didn't have the same knowledge.  That's the problem.

Right, but if it had been the other way around, and the buyer had made out instead of the seller, it's not in the news and we'd likely never even hear about it. That implies that the use of insider info is not what makes this a problem for many people. It's only in the news because they made money on the transaction (or more accurately, didn't lose as much as the rest of us). Misery loves company after all.

Well yes, because the definition of insider trading involves using personal knowledge to take an unfair advantage over what is supposed to be an open, level-playingfield market.  Someone who lost money would be someone who didn't have that personal advantage.

[erutio]

Again, this information was widely public and available in january.

[former player]

Again, this information was widely public and available in january.

The existence of the virus was known.  But none of us know what these Senators were told in their intelligence and other briefings, so there is no way we can say they only knew what we all knew - the fact that they were briefed with information that they are not allowed to pass on to the public tells its own story.