All controversial trades by Senators in the 2020 Congressional insider trading

https://www.reddit.com/r/wallstreetbets/comments/nsvma5/i_analyzed_all_the_controversial_trades_made_by/

by chetangoti • 5 years ago

246 80 5 years ago

reddit.com

ta1234567890• 5 years ago

And nothing will ever come of this

boublepop• 5 years ago

That’s what people said before every single change that ever happened.

One thing is for sure, apathy never lead to any change.

mkhpalm• 5 years ago

I like to remind people that its not really illegal if you can't get caught.

blamazon• 5 years ago

2 of the 4 senators in this analysis were voted out of office in 2020. I voted for their replacements because of this bullshit.

tolbish5• 5 years ago

Historically, what are actual pragmatic ways to bring lawmakers to justice when those lawmakers themselves have made it impossible to improve things by voting?

rjtavares• 5 years ago

I highly recommend Mike Duncan's "Revolutions" podcast, starting with season 3 (the French Revolution). It is really interesting to see how sometimes the even the threat of revolution brings change.

jdikatz• 5 years ago

Agreed. Currently devouring the Russian revolution series: concrete decisions on reforms are made based on elite opinion of conditions on the ground, and arguments to sway those opinions can turn on seemingly minor events / personalities

baybal2• 5 years ago

when those lawmakers themselves have made it impossible to improve things by voting?

If things can get to this point despite full availability of functioning voting booths, you need to seek the problem with voters themselves.

2020 elections in US were historic because they set a record for the most voted candidate, and the second most voted one at the same time.

You know all well who that second most popular candidate was, who didn't make it past the finish line by a shoestring.

tolbish5• 5 years ago

That implies that voting is a fair system and corruption like gerrymandering has no effect.

dahfizz• 5 years ago

Tarring and feathering used to serve us pretty well.

craftinator• 5 years ago

The French peasantry came up with a method that was effective.

tclancy• 5 years ago

No one ever credits the Irishman behind it all. Gil O’Tyne.

creato2• 5 years ago

Insider trading was already made illegal once: https://en.wikipedia.org/wiki/STOCK_Act

We could just vote for politicians like those that passed that law the first time around.

Defeatism in politics is really annoying. The last several (and ongoing) serious attempts at extra-political change in this country are likely the polar opposite of what you want. Be careful what you wish for.

tolbish5• 5 years ago

That's a bit of a nonsensical argument. You fear extra-political change because you assume the worst. And whatever it is you're afraid of, there is more alternatives than that to make change. Aside from that, you suggested voting...which is exactly what was attempted to make insider trading illegal in the first place.

adolph• 5 years ago

The better route would be to eliminate the methods that allow injustice. For example, instead of delegating decision authority to a politician retain all decisions as a popular vote in a basket of decisions put to voters at a certain tempo, say weekly. Voting for a politician has too high latency between voter decision and effective decision.

bko3• 5 years ago

I've looked at these data before and I wasn't convinced [0]. Primarily because the amounts were relatively small and even with insider info, it's not easy to forecast stock prices.

For instance, take David A Perdue

David Perdue sold 44 times ($3.49 MM) in the 33 days following the closed senate meeting. Interestingly James Inhofe only transacted 8 times but the combined value of shares he sold was a whopping $4.12MM.

According to his spreadsheet, Perdue had one sale worth 3MM of CLDX on 1/23/2020 at $86.82 and on 3/23/2021 (?) the spreadsheet states it was $29.49. Today the stock is $98.96, so if he had not sold he'd be up 13%. There's no indication that he bought the stock back. The rest of the trades were a few thousand, which are tiny for someone worth $15MM.

You can play all sorts of games when you look at individual trades. I don't think politicians are above reproach, but I think it's incredibly difficult to get some information and be able to execute and time the market. If you told me on January 2020 that there would be a global pandemic for the next 1.5 years, I would never guessed the stock market would be up 15% in 2020!

[0] https://mleverything.substack.com/p/analyzing-us-senators-st...

akiselev4• 5 years ago

The crime isn't "beating the market," it's "insider trading" because it's supposed to be a level playing field for the good of the system and the people in it. It seems self defeating to decide the fairness of an unfair advantage by whether or not it panned out - which we don't even know.

The cohort is so small that there's a fair chance that the (vast, even) majority of Congressmen are really bad at trading, just due to random variation. Who's to say that without that insider information, the politicians wouldn't be homeless? The control group - say, all the people who can but have no chance at entering politics ever - tends to be very, very bad at investing and does worse than the market.

gabereiser• 5 years ago

Right. It’s not whether he was successful or not, it’s whether he used knowledge not disclosed to the public to make his decisions.

bko3• 5 years ago

Who's to say that without that insider information, the politicians wouldn't be homeless?

Homeless people don't generally make it to Senator. Most of these people have wealth from the beginning, which is unfortunately required to invest so much time and money to attain the office.

You have to show that they used insider information to make trades. Most senators have immense wealth and make trading decisions based on circumstances. For instance, if they have a large tax bill or need money for an investment or money to send their children to college, they may sell some stock.

I just don't buy the narrative that someone worth tens of millions is trading a few thousand here and there to make some small return relative to their wealth. It just doesn't make sense.

You can decide that senators shouldn't be allowed to trade stocks, but again that's impractical for anyone of means. You have to actively buy and sell stocks to meet personal liquidity needs or rebalance your portfolio. I think it would make more sense to limit them to ETF purchases, much like most employees at US banks have to do.

dalbasal2• 5 years ago

I agree, but I think the point (beside being entertainment for degenerates) is to show the extent to which such things are open to abuse. Insider trading on their own accounts is just a small example.

In any case, the rally Purdue missed on wasn't related to information that he had special access to. The crash was. Beyond that, you can't attribute any given trade to any specific reasoning without an admission.

You don't have to know everything, for insider trading to work. For the most part, it's about frontrunning news/reports/announcements with fairly predictable day 1 impacts.

bko3• 5 years ago

I agree that it's prone to abuse and restrictions are reasonable. But that's different from saying that US senators are abusing insider information to make a killing in the market. People are being dishonest when looking at this data and are cherry-picking examples or choosing arbitrary dates for comparison. For instance, they focus on Kelly Loeffler selling CTRX but not buying Discovery around the same time just before a 50% drop in price. If she was trading on insider info, I would imagine she wouldn't buy Discover, a stock that's highly sensitive to consumer loans immediately before a spike in unemployment.

mirker• 5 years ago

Even if insider information gives you a small percentage advantage over uninformed trading, that still increases expected gains unfairly. A hedge fund would probably be quite happy with a 5-10% signal over random chance.

throwaaskjdfh2• 5 years ago

The question isn't whether they used insider information well, it's whether they used insider information at all.

Using information gained through their political office to inform their personal trading is improper, even if they lose money.

Just because many of these trades are bad or useless in retrospect doesn't mean that didn't try to profit from insider information.

EDIT: And I don't buy the argument that the small size of the trades relative to wealth implies that they're not using insider information. Martha Stewart went to jail over a $230,000 trade [0] at a point when her net worth was likely hundreds of times that amount.

[0] https://en.wikipedia.org/wiki/ImClone_stock_trading_case - interestingly the loss she avoided was only $45,673

chii• 5 years ago

used insider information well, it's whether they used insider information at all.

it'd be impossible to detect inaction as a result of insider info. For example, if someone were originally planning on selling, but based on some insider info, changed their mind to not do anything.

So - the point i'm trying to make is that if they _profited_ from insider info, rather than just merely utilizing it, then it should be prosecuted. But if they are stupid and did the "wrong" thing with insider info, i don't see why there needs to be any effort trying to prosecute. They got their just punishment by losing money already.

barry-cotter• 5 years ago

Martha Stewart went to jail over a $230,000 trade [0] at a point when her net worth was likely hundreds of times that amount.

Martha Stewart went to jail for lying to an FBI agent. The trade was irrelevant. Never talk to the FBI.

tedunangst3• 5 years ago

The "nothing ever changes" people are aware Perdue is now a former senator, right?

BuyMyBitcoins• 5 years ago

I dare say the underlying issue hasn’t been addressed and Perdue’s loss is due to a confluence of other factors. Most senators get re-elected in each election cycle.

bedhead• 5 years ago

"Controversial" has no meaning in this context and I dislike the framing. Insider trading is defined as both material and non-public. The notion that a senate briefing about COVID by some random person about their personal opinion on what might happen doesn't even come close to qualifying as material. Nowhere close, not even in the universe of material. People might not like it, but not only were these stock sales 100% legal, they weren't even controversial.

hartator2• 5 years ago

The thing they will decide policies that will influence markets. So it’s material and non-public if they make trades before an announcement.

kortilla4• 5 years ago

Nope. That’s not enough.

This happens many times a year with company buyouts where many shares are accumulated first, then a buyout is announced, which boosts the share price further.

ProjectArcturis2• 5 years ago

The Senate is never briefed by "some random person." These were expert virologists and epidemiologists testifying in a closed door session. Absolutely material, absolutely nonpublic. Absolutely obscene that Burr in particular would publicly say that everything is fine while selling off most of his stocks.

kortilla4• 5 years ago

Unless the information is from someone with a fiduciary duty to the company, it does not count as insider trading.

Information that will impact a company or many companies that is the result of research is never insider trading, at least not by any legal definition.

Millions of investors do private analysis on things that could impact securities, trade on that info, and share that info with others to trade on. Just being information not publicly available doesn’t make it “non-public” for the legal definition of “material non-public information”.

reasonabl_human• 5 years ago

They weren’t given financial data from company execs… instead a research report on pathology / virology. Cut and dry, not insider trading. Vote to pass new / other legislation if it bothers you that politicians can trade stocks freely.

LatteLazy• 5 years ago

It's "controversial" because people don't like when politicians use their positions to make private profits. That it isn't insider trading in the strictly legal sense doesn't really change that it is questionable behaviour...

jkhdigital4• 5 years ago

Yeah, and I didn’t even need a secret congressional briefing to know that I should be selling hand-over-fist when it became clear that the virus was pandemic-bound.

ipaddr• 5 years ago

It is crazy they allow sitting senators to buy and sell personal stock and then we ask them to make laws that affect stock prices. Force all assets into a blind trust while they are sitting.

sergiomattei• 5 years ago

If you assume the position that politicians are inherently evil, having them do their lucrative activities publicly is better than having things happen under the shadows.

The problem is public scrutiny. We don't scrutinize this behavior enough. Where is the outrage?

akiselev4• 5 years ago

Is it? The last four years seemed like impunity under constant scrutiny.

rapind• 5 years ago

Why would we assume they are “evil”? We disincentivize bad behaviour (in terms of societal impact) all the time. For example, automotive laws don’t assume all vehicle owners are “evil”.

ashneo76• 5 years ago

Not evil. Conflict of interest.

cpeterso• 5 years ago

Or only allow politicians to buy shares in index funds of US companies so they aren’t biased towards any individual company whose stock they hold.

DangitBobby2• 5 years ago

Even this is a conflict of interest. They could sell out the long term interest of the country in the short term interest of large businesses via any number of levers they control, e.g. harmful deregulation.

lgats• 5 years ago

feed of senate stock disclosures https://sec.report/Senate-Stock-Disclosures

boopmaster• 5 years ago

I know I personally advised friends and colleagues to dump hard somewhere around Feb 22nd, as the spread appeared to be unstoppable. I’ve played pandemic board game, am familiar with the infect cities phase of play. Further, if we held our elected officials to their word there would be considerably more turnover.

wbc• 5 years ago

when did you tell them to buy back?

All controversial trades by Senators in the 2020 Congressional insider trading

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