I always value the thoughtful comments of my friend Scott Johnson. But I think he’s off base on several points.
1. Jenkins’ position is generally that insider trading is not a problem, whether on Wall Street or in Washington. There is of course an argument to be made on this front, and one of the first to do so was Professor Manne from George Mason University. But even Manne says that insider trading laws SHOULD apply to government officials. While you can argue that corporate executives insider trading of stock reflects the real market value, Manne points out that doesn’t apply to government officials.
2. The claim that John Kerry has no incentive to transfer information for stock profit also doesn’t make sense. Who cares if he is already rich? Martha Stewart was worth more than $1 billion when she was charged with it. Research indicates that insider trading is usually not about the money, but a sense of entitlement. 3. The claim by Jenkins and Scott here that this information is not all that valuable anyway also flies in the face of reality. Hedge funds that are politically connected perform dramatically better than those that aren’t. And hedge funds are paying lobbyists huge sums of money to tell them what bills will pass and when so they can execute trades on that information. Obviously money managers and traders see the value here.
In a second comment Peter then addresses me directly:
Scott do you think its a good idea to allow members of congress like Nancy Pelosi to accept preferential IPO shares of stock? If I give a congressman 10K in cash and we get caught, we will both go to jail. It’s called bribery. But if I give a congressman access to lucrative IPO shares that will net them 100K in profits overnight, that’s okay?
I trust readers who have read my posts to sort these matters out for themselves and am grateful to Peter for adding his comments to the mix.