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.
Daniel Indiviglio isn't so quick to dismiss the story:
Let's say a staffer were to have learned of an amendment to the health care reform bill that would adversely affect pharmaceuticals. Should she be allowed to sell short shares in Pfizer before the public learns about this amendment? Of course not. So there should be a law against it.
Staffers profiting from their insider knowledge may not have been a common occurrence in the past, but it could be in the future. Now that the government is more intimately involved in business than it has been in decades, there's more opportunity than ever for staffers to use such information for profit. Moreover, the Internet has made stock trading simple for even the most amateur of stock traders. It's frankly pretty bizarre that there would be any resistance in Congress to such a prohibition. As a method to prevent such behavior, it seems like a no-brainer.
Bainbridge says that these staffers may be breaking existing laws:
The Congressional staffers whose trading activity was discovered by the Journal ... are potentially liable for their trading activity, assuming the other elements of the crime can be made out. The key point is that the staffers have no blanket immunity from those laws in the way that members of Congress do. The problem is that the gutless SEC has been even less willing to go after staffers than it was to go after, say, Madoff for all those years.
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