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[flagged] Josh Hawley introducing his own stock ban bill (axios.com)
77 points by 1cvmask 14 days ago | hide | past | favorite | 90 comments

60 Minutes broke this story a decade ago.


Due to the traction the story got, it led to the Stock Act.

But once the news cycle was over it was quietly, rapidly, and largely repealed:


And here we are a decade later “shocked” https://www.youtube.com/watch?v=SjbPi00k_ME

> But once the news cycle was over it was quietly, rapidly, and largely repealed:

The substance of that article only says that the online public disclosure requirements were narrowed from encompassing all Federal and Congressional employees to only elected officials and key appointees. If you read the Whitehouse signing statement (https://obamawhitehouse.archives.gov/the-press-office/2013/0...) linked by the article, this is more clear. Employees' disclosures were taken offline out of privacy concerns, apparently. The article is somewhat ambiguous on this point, and hints at more significant changes, but I take it as rhetoric, otherwise it would have been relatively easy to be crystal clear on these points. (Shame on the reporter, but at least such unquestioned political cynicism is non-partisan.)

Perhaps there have been subsequent amendments as well. Nonetheless, according to this April 2020 research paper, https://www.nber.org/papers/w26975, Senators have underperformed the market since 2012.

EDIT: And most obvious, if trading disclosures of elected officials weren't still available online, then websites like https://senatestockwatcher.com/ wouldn't exist.

This is a common tactic in the Senate to subvert legislative direction. Ossoff's bill is superior in that it prevents children from also trading (see Sen. Manchin's shady dealings).

On the other hand, the penalties in Hawley’s bill have teeth, and having the GAO investigate is probably better.

The fact that the Ossoff/Kelly bill likely won't get close to passing either means it's plenty toothy for enough senators from both parties.

The better bill is the one that passes.

If a bill can only pass because it's toothless, then what's the point? Just because it passes doesn't make it better. That's some serious stretching of logic you're attempting.

I'm a uniter! Why not ban all family members, and instead of GAO oversight make any violation a criminal offense. Congress can do that if they want.

Of course, that's likely not going to happen anytime prior to our Sun going red giant, but we can dream.

It feels like there ought to be some constitutional right to not restrict your liberties based on who your parents are. I guess there isn’t tho.

It doesn’t restrict your liberties based on who your parents are. It restricts your liberties based whom you’re mooching off of.

Yep. The article explicitly states that it is only for children who are dependents.

The law would only apply to dependent children, not all children.

What part of the constitution protects the right to trade stocks?

Taking property without compensation.

What property is being taken, in this case?

Owning property means one has property rights. The right to sell it is one of those rights.

Yes, and upon assuming a seat of power, I think it's reasonable to expect a politician and their close confidantes to divest of their ties to the market that the politician wields undue power over. As in, they can sell it, on the open market. Nobody's property is being taken with undue compensation. Unless they violate the law, and then it's subject to ordinary forfeiture of assets used in the commission of a crime.

I'm not arguing whether it is a good idea or not, I was responding to the request for where those property rights were in the Constitution.

As for the applicability of those rights to specific issues, that's up to the courts, which have a record of creative interpretations to do whatever they want to.

But buying stock means you don’t own it (otherwise you wouldn’t need to buy it), so your property rights aren’t being violated.

Sorry, but stocks are clearly property.

> But buying stock means you don’t own it (otherwise you wouldn’t need to buy it)

That doesn't even make any sense.

My point is that you don’t own a stock until you buy it. So you can restrict the ability to buy a stock without impacting the someone’s ownership rights.

The right to buy is another property right.

So you can buy anything? Where is that right enshrined in the constitution?

Looping back to the beginning, the taking of property without compensation.

But again, what property is being taken? Unless you consider “the right to buy stocks” as property itself, which seems tenuous. You basically could apply that to any such item: “the right to buy drugs”, “the right to buy nuclear weapons”, etc. This isn’t a value judgement on whether or not one should be able to buy prohibited items. Rather, it’s an observation that clearly the legal system does not interpret “the right to buy” as property covered by the constitution.

By the way, society does generally let you buy whatever you want. It’s only when your ownership of an item infringes the rights of others are you generally barred from owning something. E.g. you’re not allowed to buy nuclear weapons because they pose a danger to those around you. Allowing policy makers and their families to trade stocks also poses a danger that insider knowledge will be used for personal gain in the market. This is a form of theft against the market and public at large. What about the rights of everyone else?

I already answered that. I'm not interested in going in circles.

You just keep saying “you have property rights”, but aren’t saying where that right is written down in the law. It’s a pretty simple question with a definitive answer. I’m just pointing out that you believe something to be true without any basis. It’s dangerous.

I pointed out where they were written in the Constitution. It's one of the Bill of Rights.

It's a simple, definitive answer.

> Owning property means one has property rights. The right to sell it is one of those rights.

I've spent the vast majority of my professional career working in finance, subject to SEC rules and regulations regarding insider trading. None of this precludes own, buying or selling stocks. SEC rules prohibit acting upon material nonpublic information for financial gain, the likes of which congress critters do all the time. It is this act of buying and selling on material nonpublic information that is illegal for the common folk, and ought to be illegal for those making the laws that affect the stocks. Don't want to be subject to mandatory holding periods and disclosures? Buy ETFs like the rest of us. And yes, insider trading rules apply to my family as well. I cannot tell my parents or children or siblings or in-laws or friends any material nonpublic information with the intention of financial gain through buying or selling stocks.

If one is going to engage in buying & selling of stock to which one is privy to insider knowledge, there are means to both buy and sell said stock. It usually involves disclosures of intention to buy or sell and a predetermined date. It may typically only be done within a certain time frame, typically quarterly after earnings have been announced. If you're buying, there's typically minimum holding periods (length varies, but it effectively precludes day trading). Point is, there are legal ways to buy and sell within the rules. No one is being deprived of rights. But, if you buy or sell in violation of the rules, there may be forfeiture involved, because you were never allowed to make the transaction in the first place. Break the rules, be prepared to pay the penalty.

Congress is not above the law, and they should be subject to the same rules and regulations as everyone else. This isn't a Republic or Democrat issue. It's common sense, but doesn't benefit the people in charge of making the laws, so it doesn't happen. Or if anything does happen, it's loudly and publicly championed and then quiet neutralized when things have calmed down and no one's looking anymore.

Let me put it bluntly. If I, not being a member of Congress, pulled the same thing Pelosi does with her husband and their trading, my spouse and I would both be in jail and rightfully so. And no, Pelosi is by far the only one, but she's a very public example of this as the Speaker of the House.

I hear you, but I'm not sure that insider trading laws actually accomplish their objective. There are so many ways to cheat on this, I bet it's rampant. It's like anti-doping rules in bike racing.

Now, if it were legalized, professional investors would be monitoring the trading activity of insiders. down to the microsecond. Any adverse trades by insiders would provoke an immediate reaction, and so the gains by such trades would be minimized.

Furthermore, such moves would be public information. Would you invest in a company where the insiders were making adverse trades? I wouldn't.

As for Congressmen, if I was trying to unseat one, you bet I'd make a campaign issue out of them if they're using the seat for personal gain.

> There are so many ways to cheat on this, I bet it's rampant.

You're not wrong on this. There are, and it is. One of my previous jobs I worked at a dark pool exchange. A dark pool is an entirely legitimate and regulated quasi off the books market. It's "dark" in that prices at the exchange are not listed; no best bid/offer or any other order information is advertised. It's also members (customers) only. It's not available to the general public. It's primarily a ways of moving high volumes of trades with the intention of not moving the market. Executed trades are reported as required, and NMS (National Market System) Regulations have to be abided by. i.e. A dark pool cannot trade outside of the NBBO (National Best Bid/Offer) without first having taken (bought /sold) top of the book at the NMS exchanges that have the NBBO. We're still subject to SEC, FINRA reporting and regulation and are regulated by the same.

It was a small firm, less than 10 engineers working on the technology stack, so we all wore many hats. Besides working on the trading system, I was also responsible for working with our chief compliance officer to gather trade data for inquiries from SEC, FINRA, even the FBI. Most of what they were looking for was not insider trading, but other prohibited activities such as spoofing and front running.

I've also worked at hedge funds, private equity funds, mutual funds & investment advisors. Every firm I've worked for (especially the hedge funds & PE funds) have used technology to their best (legal) advantage they can. Need lower latency? Co-location at the exchange is a perfectly legal option. Racks closer to the exchanges offer a premium rent over those farther away. Microwave transmission for line of sight? Most certainly. Lower latency, but also significantly lower bandwidth. Bonus points for being able to bounce a signal off the ionosphere from Chicago to London faster than satellite or sea cable.

That said, when it comes to Congress, they're in the unique position of not just being privy to an absurd amount of material nonpublic information that unscrupulous actors can make a killing off of, they're also in the unique position of enacting (or retracting) laws that affect the companies they're trading on. It's this power that is unique to Congress, and why they deserve extra attention and rules on reporting, holding periods, trading windows, etc.

Insider trading is a problem among the general public, but it's not nearly as big of a problem as the media makes it out to be. Yes, there are unscrupulous firms out there, but the vast majority take the rules and regulations seriously, because you have to, or you will no longer be in business and real jail time for potential violations. I believe Congress should be held to a higher standard than the general public because of their unique power over the industry.

The ninth amendment.

> Ossoff's bill is superior

I disagree.

"Hawley's bill would have the Government Accountability Office provide oversight, whereas Ossoff would leave that to congressional ethics committees."

Congressional ethics committees are notoriously partisan and unreliable in enforcing. You are trusting Congress members to police themselves, which isn't remotely reliable. In reality, they only police members of the opposing party. The GAO would be far superior.

> in that it prevents children from also trading (see Sen. Manchin's shady dealings).

Were Manchin's adult children "dependents"? How is that defined in the bill? Also, it's been interesting to see negative attention on Manchin suddenly get ratcheted up the minute he wouldn't vote in a manner popular with people who don't live in his state.

> This is a common tactic in the Senate to subvert legislative direction.

The assumption that the purpose of this specific instance is to "subvert" is speculative. I'm no fan of Hawley, but he has been very public about wanting to ban stock trades by members as much as Ossoff.

I tire of the red/blue tribal loyalties on this site. I see two corrupt tribes, filled with people who won't vote for this bill. But both, and their foolishly gullible supporters, just sit and point at the misdeeds of the opposing side, unaware of their information bubbles.

The superior bill is the one that gets passed. This is something democrats badly need to learn wrt Manchin.

Until then we're just giving completely, utterly pointless kudos to whoever can play chicken most convincingly. I'm sure Hawley's office could have come up with something with even slightly more teeth if Ossoff came to him first with a GAO bill.

A poison pill is a common tactic too. That was possibly included in Ossoff's bill to stall the whole thing so it goes nowhere.

Even if Ossoff's bill went anywhere, it's too soft and the people setup to hold them accountable are themselves.

Side note: If you want to sling mud against Manchin as he's open season now for the Dems apparently please be specific so people can refute you.

I'll take one step at a time instead of all at once attempt and nothing in the end.

Keep an eye on the negotiations and who stalls what, what they demand, etc.

Make politicians construct simple concise bills.

edit: https://news.ycombinator.com/item?id=29915575 JPKab said it better than I could

How is preventing children (I suppose you mean adult offspring) or even spouses constitutional?

Insider trading is illegal. Children (adult or otherwise) of individuals in possession of material non-public information about a company are not allowed to trade stocks based on that information.

The way I see it, congressional trading rules are a natural extension of insider trading rules. Children/spouses should be prevented from trading not because they are children/spouses, but if/because they’ve been made aware of inside information.

What part of the constitution would prevent such rules from being implemented?

If that's the case why is a new law needed in the first place? The adult children are independent of their parents and can be prosecuted under current law.

For the same reason a new law is required for elected officials. If an elected official is currently exempt from insider trading rules, and if the rationale is that the official doesn't actually hold "inside" information, and if it's necessary to change that, then it follows that the "tipping" clause must also be updated.

This could also depend on how a new law is written. If the law is explicit that information gained as an elected official is material/non-public, then existing tipping clauses may already account for this.

However, if this is not explicitly accounted for, it becomes an easily exploited loophole.

I'm still curious though - why is this potentially a constitutional issue?

Pretty sure that is not the case. It's members of a household. Grown children living elsewhere are not restricted.

> Ossoff's bill also would apply the ban to any *dependent children* in addition to the spouses of lawmakers, whereas Hawley's bill would not.

I mean this sort of makes sense. In order for an adult child to be a dependent they have to be pretty much invalid, and not responsible for their own actions.

If its dependent children, the difference between Hawley and Ossoff's bills are inconsequential and Manchin's example is irrelevant in the OP's post.

Not adults but dependent children. It is a pretty standard clause if you work in finance or any context where you could have insider info.

I can see that working as a part of a private contract, I'm just not sure it's constitutional for the government to prevent one person from doing something based on their relationship to another person. Especially spouses, but perhaps even children.

There are a million laws which take marital status into account, so not sure where you are getting that assumption from

What laws prevent a spouse from doing something based on their spouse's job? I can't think of one but I am not super imaginative.

But someone chooses to be married to an individual. You don't choose who your parent is.

So as a government official with appointment authority, should I be allowed to hire my wife to work for my agency in a role they may or may not be qualified for?

It’s pretty easy to see how this stuff goes off the rails.

I think that's different. This isn't about appointing someone to a job, it's about preventing one person from trade with another strictly because of their marriage.

Say if I was a Senator, and I had the ability to kill some legislation that would financially hurt Facebook using my committee post. I call my wife before the hearing and tell her to buy stock, is that ethical?

It's not ethical, but we're talking about the constitution, and fines or imprisonment. Should your wife go to jail if she buys stock while you're a senator? Would that be constitutional? I sincerely doubt it.

You can get a divorce or stop being a dependent.

It’s been tested in court. Employment isn’t a right.

When I was subject to public officers law, my kids were unable to play the lottery, engage in any sales or lobbying activity without written permission from agency counsel.

I know of one case where a senior leader was referred for civil penalty (fine up to $20k) because he took a meeting with a prospective contractor that his kid worked for.

There’s other areas like this as well. The actions of a spouse or child can affect a security clearance or be disqualification for employment as a police officer.

If you read the link, it specifically says dependent children, which seems fair. I don't see how how the constitution protects your stock trading rights if you are likely to be privy to insider information.

If you work in the financial industry, there are already draconian rules on oversight for all trades made by you, your spouse, your dependents, and even roommates. Why shouldn't this oversight extend to members of congress?

roommates too?! I guess you weren't kidding : https://www.reddit.com/r/legaladvice/comments/9seqfv/the_sec...

The children aren’t prevented from anything, people are prevented from being senators if their children trade

I'm not qualified to say if it's constitutional, but it would seem that it's widely accepted as constitutional if existing insider trading law applies to similar situations.

Can you explain the reasoning more? And why making laws for Congress would raise a novel issue?

It says "dependent children", which I assume would exclude adults.

I don't remember any part of the constitution that would apply either way.

College students who are paid for by their parents can also be claimed as dependents on tax returns. I have no idea whether that is the criteria in Hawley’s bill, but it would be reasonable. If you want to trade stocks, don’t take senator dad’s money.

Probably made constitutional with a claus saying the trade has to be communicated by the congressmember.

How would it be? Senators' families aren't a protected class.

Hawley's bill is much better though. I'm glad he didn't water it down to make Ossoff happy.

> Ossoff's bill would leave oversight to congressional ethics committees

Lol, ok buddy. We've all seen that congress in not able to conduct meaningful self-oversight.

> violations of Hawley's measure would require lawmakers or their spouses to disgorge any investment to the U.S. Treasury

Unlike Ossoff's bill, that's some serious teeth.

Even better, there's zero accountability for himself or any of the 50 republican senators who passed on cosigning Ossoff's bill when this also goes nowhere. It's nice not being in power!

Even better, there's zero accountability for himself or any of the 50 democratic senators who passed on cosigning Hawley's bill when this also goes nowhere.

The senate is 50/50, this logic works both ways. Either party could vote for the other’s bill tomorrow and be done with it. I’d prefer the Dems work with Hawley to pass the better bill.

It's hard to think about anything but this:


>If Senator X "makes a concession" the relevant media will proclaim him a loser and a coward, they don't want representatives, they want cage fighters. There's no reward for compromise and there's no safe place to attempt it, either.


>Or, said differently, if there was a government shut down at a time when the news came out only weekly, it would mean we were getting a new flag.

I think this would stop if the media would report about issues and not mostly political gossip.

This (or similar) bill is about as likely to get passed as Term Limits legislation.

Hot take but I'd much rather politicians make their money via open, fully-disclosed investments in public companies vs shady backroom deals where their kids or shell companies get untracked kickbacks.

Pelosi represents SF. It's her congressional district. Her investing in the top SF companies (many of which include tech companies which have performed really well) is a rare case of supporting her constituent businesses. Sure it's horrible optics and politics and yada yada but people should consider that the alternative (banning all trading as a member of congress) is potentially worse for open democracy.

> Sure it's horrible optics and politics and yada yada but people should consider that the alternative (banning all trading as a member of congress) is potentially worse for open democracy.

"Murder is OK as long as it's committed in the town square" is a terrible policy. Lawmakers taking advantage of insider info, let alone upcoming regulatory changes, to make huge amounts of money while holding public office is straight-up antithetical to the purpose of being in Congress (the people). Want to make tons of money? Great, become a banker or a C-level or a lawyer in private practice, not a congresswoman.

That’s a genuinely hot take, and I do think there’s some merit.

That said: I think your hypothetical is better than our current, objectively ridiculous situation. “Everyone’s doing it in the open” is a pretty lame excuse, and definitely doesn’t preclude the possibility of kids + shell companies anyway.

The talk was of a bill to bring congressional trading in line with executive trading (I.e. totally transparent with 6-12 irreversible lead times on any trades). I don’t know that anyone was pushing for an outright ban.

10b5 plans can be cancelled, with the penalty of a short waiting period before re-adopting a new 10b5 plan. (It’s obviously difficult to prove an improper insider trade happened if no trade happened.)

Your 'hot take' is that politicians should continue making money on investments like they've been doing for decades?

I think they’re just pointing out that there could be unintended consequences to just simply barring Congress members from trading - maybe it just increases incentives for back room deals and the like? Transparency in this case is a much higher bar than just banning stock trades

I'd rather they instead be given a binary choice between not making investments or making investments in the general good of the American economy (eg something like the Wilshire 5000) ... And while we're at it lets tie their pay to the median income so they only get a raise if we do.

What do you mean "horrible optics"? It's outright corrupt. The issue here isn't "Nancy Pelosi supporting local businesses". The issue is her husband acting on private information to reap enormous profits.

What private information?

Before I start, I lean Dem and I like Nancy. However ...

she has famously said that "you have to pass the bill before you see it" - not an hyperbole, the obamacare bill was being negotiated forever and changing but at one point of time they had to force the vote first even if the version was not read by everyone.

that kind of story applies to a lot of bills. I may be able to sneak in a paragraph just before the vote that says "3 billion dollars of government subsidies for drought stricken cashew farmers in California" and if someone can find that out before it is published on their websites, would you not think it is a private information?

We do have to credit Nancy for bringing so much attention to this issue through her flagrant actions. Probably not intentional, but credit where credit is due.

I'd guess there are other members of congress who did/do exactly the same thing (but much more low key and out of sight) who are not very happy about it being potentially ruined for everyone else.

>(but much more low key and out of sight)

What does this mean? Other reps do exactly the same thing as Pelosi and are required to report their trades in the same way. Pelosi is the target of attention due to reporting about exclusively Pelosi's actions

Don’t you think that they are getting a lot of information before you get it or can influence certain decisions in their favor?

In my view they need to out their money into a blind trust. If they don’t want to do that they shouldn’t run for office and a nice side effect would be that congress isn’t full of millionaires.

I agree that they should have more simple investment limits. Like index fund or whatever.

But even your first sentence is some hypothesis, not based on any facts or timeline of events. Looks like her husband who has his own investment firm was writing some clever option contracts and such on big name companies like Roblox.

Everybody in the market is risking it on these types of companies these days.

What bills will be brought to the floor. What bills have the votes to pass. What bills do not. Access to confidential information which has not been released to the public. Etc. etc.

I'm honestly not sure what you want me to say. You're welcome to Google the issue for yourself and make a determination.

I'm just saying if you levy a huge accusation like "she gets private insider information" then you need to back it up with factual evidence.

Passing bills, sure. But most of these impactful bills are like months in the making and everybody knows which way they are heading.

Her husband is an investor, so no doubt he writes all these options and such.

> I'm just saying if you levy a huge accusation like "she gets private insider information" then you need to back it up with factual evidence.

Nancy Pelosi's husband regularly beats the market by large margins. You can find it suspicious or not. I've given my opinion. She knows her own mind, she has access to market-moving-information prior to the public, and she likes to buy stock.

She doesn't need to receive information (though she can). She just needs to generate it (which is her job). When you are in a position to move the market, you should not be buying options.

Getting huge gains the past 2 years has not been hard. Everybody is making 20% or more a year easily.

Plus they're already rich, which means they can invest a good chunk in higher risk. Higher risk has paid dividends bigly in the past decade and especially last 2 years.

Anyway, need some proof. But I 100% agree that senators should be held to a very high standard, and would welcome strict laws that allow them only general investments in the US economy.

This is why murder should be legal. Because otherwise murderers might do even worse things.

Government ethics are all about optics. Pelosi’s personal situation when looked at among others (ie Sen Feinstein, whose husband is one of the largest commercial realty managers) creates a perception of corruption.

That perception fuels whataboutism and facilitates graft. Nobody is going to investigate Senator X and trigger a counter-investigation of Representative Y.

> is potentially worse for open democracy.

Why is it worse?

I don’t understand why such a political news story is on front page of HN. It doesn’t belong here.

Did the Ossoff/Kelly bill get to the front page?

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