Alabama Congressman Spencer Bachus is under fire for allegedly using “insider” information obtained as a member of the U.S. House of Representatives to set up beneficial stock trades and enrich himself.
Bachus was one of several lawmakers whose market trades were questioned in a new book by Peter Schweizer, a research fellow at a Stanford University conservative think tank, the Hoover Institution. The book, Throw Them All Out, was featured Sunday at The Daily Beast, and on 60 Minutes.
According to Schweizer’s research, Bachus, as a ranking Republican member — and, since 2011, chairman — of the House Financial Services committee, was privy to confidential briefings about the state of the economy and economic dealings, and he made trades on issues he would have been briefed on, such as the 2008 economic collapse and the passage of the controversial Troubled Asset Relief Program, or TARP.
“These meetings were so sensitive that they would actually confiscate cell phones and Blackberries going into those meetings,” Schweizer said on 60 Minutes. “What we know is that those meetings were held one day and literally the next day Congressman Bachus would engage in buying stock options based on apocalyptic briefings he had the day before from the Fed chairman and treasury secretary. I mean, talk about a stock tip.”
The economic collapse trades were examined more closely in Peter J. Boyer’s review of Throw Them All Out for The Daily Beast:
“On Sept. 19, 2008, after attending two such briefings, Bachus bought options in an index fund (ProShares UltraShort QQQ) that effectively amounted to a bet that the market would fall,” Boyer wrote. “That is indeed what happened, and, on Sept. 23, Bachus sold his ‘short’ options, purchased for $7,846, for more than $13,000—nearly doubling his investment in four days.”
A Bachus spokesperson said that Bachus does not trade on non-public information.
In the business world, trading on insider information is a crime punishable with prison time, but Congress is exempt from such laws.
“The world’s greatest deliberative bodies are exempt from insider trading laws, even though its members get quicker access to market-moving information than almost anyone else,” David Weigel, a journalist and blogger at Slate, wrote Monday.
Bachus was not the only legislator named in Schweizer’s book. Sen. John Kerry (D-Massachusetts), Rep. Jim Moran (D-Virginia), Speaker of the House John Boehner (R-Ohio), and former Speaker Nancy Pelosi (D-California) were also noted examples of members of Congress who made possible insider trades.