Comment by aurareturn | Hacker News Reader

Comment by aurareturn | Hacker News Reader

  "He made a reference to billionaires, okay?" Scott said of Hawley. "I don't know when in this country it became a negative to make money. But somehow, if you've made money, you're supposedly — I think Senator Hawley suggests — you shouldn't be serving, because you might trade stocks." 

  "Anybody want to be poor? I don't." Scott continued. "Right? So this idea that we're going to attack people because they make money is wrong. Is absolutely wrong. We should cherish all of our different backgrounds. ... So, I think it's disgusting what is going on here."

This is Republican Sen. Rick Scott by the way.

Seems like he's using some form ad hominem to distract from the actual purpose. The purpose is not to prevent congress from getting rich. The purpose is to remove conflict of interest. Congress can have insider info on individual stocks. For example, knowing that Oracle will get approval to buy Tiktok early can change Oracle's stock price. That's insider info.

I think only allowing congress members to buy and sell index funds is fine. Not individual stocks. Or if they want to trade individual stocks, make them declare 1 month earlier and make it public.

Rick Scott made his money by being the CEO of a company that paid a $1.7 billion fine for Medicare fraud.[0] He’s one of the most corrupt people in Congress.

[0] https://www.politifact.com/factchecks/2014/mar/03/florida-de...

Have you ever watched CSPAN? He's doing the same stupid routine they all do. Trying to spew keywords and generate soundbytes he thinks will be useful to him and bad for the opposition. I'm pretty sure they all get taught this or something. It's so f-ing tiresome. I wish they'd just discuss things more normally.

What they're doing is having someone else manage their stocks, but by some strange coincidence their manager makes amazingly successful trades.

Sensor Scott opposes the blanket ban because insider trading is already illegal, and thus the ban makes punishable otherwise entirely legal behavior. And he's right- it isn't, and shouldn't be, illegal or considered wrong to be successful, if done the right way.

There's a middle ground somewhere in there I'm sure, but given how suspiciously well some members of Congress have done, and how there's been seemingly not enough accountability of it, I'm not terribly empathetic.

>What they're doing is having someone else manage their stocks, but by some strange coincidence their manager makes amazingly successful trades.

It speaks volumes about the relationship between the government and the people that they nailed Martha for (a bullshit follow on charge stemming from an investigation into) a small time variant of basically the same thing.

Like how if the police shoot your dog it's just property but you shoot one of theirs and well you might as well shoot the officer too because it's another count of the same crime.

Goddamn double standards everywhere. What ever happened to equality under the law?

> There's a middle ground somewhere in there I'm sure

The parent commenter pointed out the middle ground:

> I think only allowing congress members to buy and sell index funds is fine.

That’s not a middle ground; index funds are profitable based on the country’s success, not the trader’s. And you don’t get that same dopamine hit as gambling.

They’re the smarter place for people to put their money but I wouldn’t consider them a comparable product.

Perhaps Congress have a way of influencing the country's success in a way that Uvix can't?

If congress has to bet on the overall economy instead of e.g. spotting that riot gear providers goes up when country goes down, that would be a good thing?

Yes, it is a middle ground. The extreme positions here are "no equity ownership, directly or indirectly" and "no trading restrictions at all." Allowing index fund purchases is squarely in the middle of that continuum.

Additionally, your description of how people purchase and make money on indexes funds is incomplete at best. Really, it's just factually incorrect in that it presumes a certain purchase strategy. People do short-term, dopamine-inducing trades of index funds all the time.

But, I don't think elected representatives should be able to do that, either. At the very least, successful short term trading - directly or through an advisor, of an individual security or a fund - creates the appearance of impropriety.

It's very difficult to get caught, and then to prove wrongdoing, under the current rules. There has already been reporting of filing irregularities.

https://www.newsweek.com/stock-act-congress-violations-tradi...

Making the rules simpler will make it easier to comply. Removing the incentive for insider trades strikes me as a good thing.

Some jobs place restriction on your ability to trade individual stocks - I discovered this when I went to work at an investment management firm. This was a policy applied to all people that worked there.

I see no reason not to do the same thing for Congress. The legal space is well-traveled and the fundamental concern - namely, the perverse incentives resulting from asymmetric access to valuable information - is present in Congress the esame way as in a sizable investment firm.

Index funds and mutual funds are often exempt or subject to less scrutiny, and that could be here too.

I run the numbers every couple of years and I’ve never had a year that shows individual Congress people are particularly better at trading than an index over the course of their terms.

The fact is, the vast majority of Congress people _own index funds_ or similar portfolio construction.

When there are outliers they regress after a few years. The last time I ran the numbers the the majority of the outliers just got into Nvidia a little early. They mostly had tech heavy portfolio construction.

The big outliers were people like Pelosi who were married to wealthy spouses who were doing exotic trading, but several of them did poorly as well.

The fact is, Congress people have more scrutiny on their trades than the average person and more downsides.

We should restrict trading by Congress people because of the image of impropriety not because it’s actually common to make a bunch of money doing it.

Only broad index funds would be the no-brainer solution.

> For example, knowing that Oracle will get approval to buy Tiktok early can change Oracle's stock price. That's insider info.

If a congress person gets that info from oracle or TikTok or someone with fiduciary duty to their shareholders that’s insider info (in the US) and that congress person is subject to existing insider trading laws.

If they get it as part of their duties in Congress it’s not insider info, the same way any other person without the fiduciary duty.

It may be an abuse of power and we may want to ban it, but it’s not insider trading.

It’s an important distinction because insider trading laws (in the US) are not predicated on open access to information, rather on not stealing from people you have a duty to. It’s not a fairness doctrine it’s property rights one.

Also surprised it didn’t mention that Rick Scott got rich by defrauding Medicare. To the tune of 14 felony counts against his company and a 1.7B dollar fine.

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