Posted 10 years ago on Dec. 22, 2011, 1:26 p.m. EST by Sumflow
This content is user submitted and not an official statement
Not having real time disclosures of securities trades is the loophole, which gives members of congress and legislative staffers immunity from enforcement of insider-trading laws. The delayed reporting of securities transactions by congress, defeats, obstructs, and impairs their use as timely evidence. Insider-trading cases are hard to prove, because the trades must be tightly linked to the events or information on which they are allegedly based.
About one hour and eight minutes into the Senate hearing on insider trading http://goo.gl/mW3Qv. I think it might have been Robert Walker who told congress why blind trusts are not a workable solution to insider trading. These kinds of trusts cost a lot of money. “They are only blind is so far as .. they are not blind what you put into them initially, they are only blind if you put in cash, or after a period of time the assets are sold down to a particular level, then you are notified that you do not have those any more.”
The first blind trust used in modern times was that of President Lyndon B. Johnson. He knew what was in the trust and it was managed as he wanted. It would have been public information had the assets been sold. Anyone with half a brain can get around a blind trust. The way to catch these people is to have real time disclosures. Their constituents can send them back, or throw them out. If they fail prompt disclosure, put them in jail, just like corporate insiders. They can inside trade as much as their voters allow, the enforcement that will work is failing to disclose.
The SEC, which conducts most insider-trading investigations, urged faster disclosure of stock trades by members of Congress on electronic, searchable forms. This is why no Congress people were investigated under the current laws. Trades need to be disclosed in "real time or near real time," so that the memories of potential witnesses are fresh and suspects do not have time to cover up their actions.
Blind trusts are not blind, only the people who think they are. See: The problem with blind trusts. http://goo.gl/iuCkO
Central to the new law proposed by the Senate is a “duty arising from a relationship of trust and confidence,” that would be owed by members of Congress to the people, and traders need to "disclose nearer to real time,” to substitute a philosophy of full disclosure for the current philosophy of caveat emptor.