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Comment by subsubzero | Hacker News Reader

Members of congress should not own or trade stock, full stop.

I am so surprised that this is even legal, it gives an extremely unfair advantage to congress as they have inside info on military contracts, lawsuits and if govt. agencies initiate investigations into companies. You want to end corruption in politics(well make it less corrupt) then barring congress from owning and trading stocks and other related securities is a good start.

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FTA, you will be happy to know (and I agree):

> Congressman Raja Krishnamoorthi, a Democrat from Illinois, is part of a bipartisan group of House and Senate members who have introduced legislation banning lawmakers from owning individual stocks.

I don't understand how this would work. Owning stock is not some kind of investment only the elite have access to.

What about people who worked at a company that gave them a few thousand dollars in equity compensation? Would they forced to sell their stock?

Does this apply to an S&P 500 ETF, if so, why?

Presumably 'individual stock' is an inaccurate description, and the point is exactly not to apply to ('normal'/basket) ETFs. (But it's not trivial to define, since presumably you would want to ban 'Acme 3x Levered TSLA ETF' or short fund or whatever.)

>Would they forced to sell their stock?

No, the proposed legislation does not affect your existing holdings you had before you become a Member of Congress, as long as you don't touch those holdings during your term of office.

"Members would also have the option of retaining their existing investments while in office, so long as they do not trade them while in office, or transferring their holdings into a blind trust. [0]"

>Does this apply to an S&P 500 ETF, if so, why?

No, since the S&P 500 is not an individual stock. All broad-based investments are exempt.

[0] https://krishnamoorthi.house.gov/media/press-releases/congre...

So something you might find interesting there is a website out there https://senatestockwatcher.com/ that reports on the trades made by congress people and one of the things that was discovered is that many congress people have below or only slightly above returns on stock market trading.

That being said as far as I know it is only trades they make so there may be ways around it but just an interesting point of data.

Is it legal for Members of Congress to pass tips on, to friends and relatives?

not legal but not easily detectable either

The 2012 stock act supposedly stopped this https://www.congressionalinstitute.org/2018/08/16/can-member...

Nancy Pelosi's (net worth $112m) recent financial activities with Emhoff make me very dubious about this.

https://fortune.com/2021/07/08/house-speaker-nancy-pelosi-hu...

etc etc

> Nancy Pelosi's (net worth $112m)

Significant portions of that are due to her being married to a venture capitalist and real estate investor.

They make a great team.

Separately I mixed up Paul Pelosi with Emhoff, Kamala Harris's current husband.

Technically, insider trading is defined by anyone trading on or passing non-public knowledge to an "outsider".

So, yes.. if a Congress member passed along material information to someone that they traded on, both should get prosecuted. I'm not sure I've seen it happen to politicians in my lifetime, but totally should.

> many congress people have below or only slightly above returns on stock market trading

This is an assumption unsupported by the data or this website.

We do not have accurate position details, nor exact dates and times for the trades, to understand their earnings. Further, Congress members only provide ranges of values for the trades they make, with a significant reporting delay.

The article has a quote from Nancy's team that says she does not personally own any stocks and that the transactions are made by her husband.

Barring congress from owning or trading stock would do nothing in this case. Barring congress and their direct family members from owning or trading stock would just mean that Nancy's cousin or good friend suddenly becomes a genius investor.

Insider trading is already illegal. It's just not being enforced here, or it's too difficult to prove. (Or maybe her husband really is just psychic!)

While we're dreaming… serving officials (and anyone they can't be compelled to testify against) should have to, before taking office:

  1. Disclose their income and assets, and keep doing so each year while in office
  2a. Put all their liquid assets* into a blind trust, or better yet
  2b. Put all their liquid assets* into an index that tracks our economy (not just The Market)

* Minus reasonable living expenses—we wouldn't want them to go hungry, now would we?

It really doesn't matter. They're puppets anyhow and this, along with the sweetheart sinecures at banks, drug companies, etc, are just compensation for being figureheads.

Think about it, people that are signing off on trillion dollar checks are only getting million dollar kickbacks. They're not in charge. It's literally an order 1/10^6 cut.

I can't imagine how we could prevent a duly elected representative of a congressional district from being sworn in if they refuse to sell their stock portfolio. It would amount to disenfranchisement.

It's more complicated than that. If you prohibit stock ownership, they will cheat with every other asset class. (Real estate deals are easy too). If you prohibit all asset classes, it means only poor people can run for office - so they give inside tips instead to their brother, son, or campaign donors while maintaining a laughable illusion of poverty.

It's a tougher problem than it appears to be.

How do other countries contend with these issues? America is not the be-all, end-all, and your comment seems to imply that this problem has never been wrestled with except hypothetically.

That's a good question. I know my comment sounds defeatist. Another commenter suggested requiring trades be announced in advance. Sometimes blind-trusts are used, but there's not much to show they make a difference. Opening up hearings and Congressional communications helps. Honestly it's a tough problem.

I don't think there's any country that has truly solved these issues; at best, they mitigated them. Politicians everywhere are quite a bit richer than your average citizen.

The easy solution here is to just vote her out of office as she's (Pelosi) obviously corrupt, put the partisan nature of American politics makes that very difficult.

Do you think it's just one person?

and you think her replacement wouldnt take advantage of the free money? also, obviously, she's already far from the only one [0]

0: https://www.bloomberg.com/opinion/articles/2020-03-20/senato...

I wish we could easily pinpoint a handful of people who do this (or any kind of conflict of interest) and replace them. Unfortunately it is a systematic problem, and if you tell me x from congress does not do it I’d have a hard time believing it.

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