On Monday, the Wall Street Journal ran a big feature on what it portrays as a serious problem: Congressional staffers are not subject to insider trading rules. So if they know nonpublic information about a bill in the works that would benefit or harm a particular firm or industry, they can invest freely and reap whatever profits follow. Is this okay?
The Journal doesn't think so. Its story focuses on an energy policy advisor to Harry Reid named Chris Miller who made a few thousand dollars betting on renewable energy in 2008. It followed up Monday's story on Tuesday with another article focusing on a bill introduced nearly five years ago to prevent precisely this problem. The current version of the "Stop Trading on Congressional Knowledge Act" is supported by just nine members of Congress, however.
Like Congress, Felix Salmon of Reuters isn't so concerned with this problem, however. He thinks that there's thin evidence that insider trading by staffers is a really occurring much. He writes:
The WSJ story is shot through with the implication that there's a big scandal here, but I don't see it. Instead, I see a lot of subtle rhetorical tricks, like the way in which the paper leads with a single profitable trade by a single staffer.
Salmon's point is well-taken. Despite WSJ's effort, it doesn't appear to have identified a mountain of evidence that Congressional staffers have been taking advantage of their insider knowledge. He said he would be fine with legislation to prevent it, but doesn't see a scandal here.