Congressional staffers gain from trading in stocks

Wednesday - 10/13/2010, 3:47pm EDT

According to the Wall Street Journal, at least 72 aides on both sides of the aisle traded shares of companies that their bosses help oversee.

Among the staffers was an aide to a Republican member of the Senate Banking Committee who bought Bank of America Corp. stock "before results of last year's government stress tests eased investor concerns about the health of the banking industry," according to the article.

Members of Congress aren't covered by insider-trading laws, according to an article by UCLA corporate law professor Stephen Bainbridge. But Congressional staff members could be found to be illegally trading stocks because of a Supreme Court case that found employees who misappropriate confidential information from their jobs are defrauding their employers and clients. So, Capitol Hill staffers don't have the same immunity from prosecution that their bosses have.

Another WSJ article points to a 2004 study co-written by George State University professor Alan J. Ziobrowski co-wrote that found senators' stock picks beat the market by an average of about 12 percentage points a year during a stretch of the 1990s. Since that study, Ziobrowski said he has heard from other researchers that the trading performance of members of Congress no longer is wildly better than the public's stock record.

This story is part of our daily DorobekINSIDER Must Reads. Be sure to check out the full list of stories.