Let Congress trade!

Larry Ribstein —  2 December 2011

I have previously discussed here and here the policy arguments against a broad ban on Congressional insider trading (this is apart from Steve Bainbridge’s serious problems with the proposed legislation).  

Now Todd Henderson and I have weighed in on Politico with more on why we should let Congress trade (while imposing strong disclosure duties).  It’s obviously not a popular position these OWS and politician-bashing days. But we think it’s a sensible one that deserves serious consideration.

Update:  Bainbridge responds.  He focuses on the perverse incentive problem, which Todd and I acknowledge.  Unfortunately, he ignores our argument for disclosure as a way of dealing with that issue, and the serious problems of having the SEC enforce a Congressional insider trading ban.  Consideration of these issues caused me to change my views on banning Congressional insider trading.  I think it’s inconsistent to focus on enforcement problems in banning private activity (as both Bainbridge and I do) and not do so in banning public conduct, where enforcement is even trickier.

Larry Ribstein

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Professor of Law, University of Illinois College of Law

One response to Let Congress trade!

  1. 

    I will suggest to let the members of congress trade and publish an index on a the WSJ what they are buying/selling, let’s name it the Ribstein-Bainbridge Index, so the public can know it and buy/sell the stock. The Index will display all the stock bought/sold by members of the congress. Then we will become rich like these guys who were porteyed in 60 minutes. This will be the market solution to the problem.