The Astounding Trading Abilities Of Congress

According to a fascinating, and disturbing, article posted at Minyanville today, members of Congress have an extremely impressive investing and trading track record. Furthermore, the implication is that they are able to achieve "abnormal returns" due to insider trading, which is NOT prohibited for Senators and members of the House of Representatives and their staff. Specifically, "the Securities and Exchange Act does not apply to members of Congress, according to Craig Holman, legislative representative at government watchdog group Public Citizen." “Any inside, non-public knowledge they gain can be acted upon,” Holman told Minyanville. “Some of the stories are just… breathtaking." A new study titled "Abnormal Returns From the Common Stock Investments of Members of the U.S. House of Representatives" published in the journal Business and Politics reveals that "a portfolio that mimics the purchases of House Members beats the market by 55 basis points per month (approximately 6% annually)." A previous study conducted by Georgia State's Alan Ziobrowski, which was conducted on financial disclosure data from 1993 to 1998 for U.S. Senators, reports even more astounding market beating returns. The Senators' stock portfolios annually outperformed the stock market by 12%, while U.S. households lagged the market by 1.4% during the same period. The studies appear to offer conclusive proof that members of the U.S. Congress are using privileged information to front-fun other investors. Making matters even worse is the fact that they are not legally prohibited from doing this as the Securities and Exchange Act does not apply to members of Congress and the SEC does not have the authority to hold employees of Congress or the Executive Branch liable for using non-public information gained from official proceedings for insider trading. Read the entire article, written by Justin Rohrlich, at Minyanville.com.