This is especially the case when it comes to knowledge about financial matters. While the SEC has rules that try to limit the advantages of insider trading, there are no such rules that apply to Congress. And, with a lot of attention being devoted to financial matters in today's world, Congressmen, their aides and sycophants do pick up a lot of information that could help one trade smarter. For example, a study by a Georgia State professor concluded that some senators did 12% better than the market when trading. Congressmen were not as knowledgeable; they only bettered the market by 6%. For the past three years there has been an attempt to make our leaders subject to regulations similar to those that apply to corporate insiders; this has met with failure thus far.
We have the same problem with employees of the SEC. It has guidelines to prevent 'insider' trading, but no mechanism to monitor the situation. In the words of the SEC Inspector General, “The SEC had essentially no compliance system in place to ensure that its own employees, with tremendous amounts of non-public information at their disposal, did not engage in insider trading themselves. The existing disclosure requirements and compliance system were based on the honor system, and there was no way to determine if an employee failed to report a securities transaction as required.”
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