The "mosaic" theory of determining which trades are legal allows investors to act on a combination of public information and non-material nonpublic information. This results in unusually high returns for skilled investors, but has been questioned when those investors include members of Congress and their staff.
General public outrage has culminated into momentum behind the Stop Trading on Congressional Knowledge Act, or aptly, the STOCK Act.
First introduced in 2006, this bill held few co-sponsors until very recently. Today, 171 House members have signed their names to bar trading by lawmakers and federal staffers across the government with access to material, nonpublic information.
Members of Congress have introduced other bills mandating either blind trusts or trade disclosures at least monthly or, according to another bill, as frequently as every three days.
In response, the House Financial Services Committee held a hearing on congressional insider trading today. Who chairs this committee? Representative Spencer Bachus (R-AL), one of the lawmakers named in the CBS report and Schweizer's book.
You can watch the proceedings yourself here .
A running theme during the hearing was the issue of public trust and the current lack thereof.
Martha Stewart quickly regained her fans' trust following her prison sentence for insider trading. (Then, again, did she ever lose it?)
Perhaps there is hope still for Congress. Or perhaps more than paperwork and this knee-jerk reaction to public outcry will be necessary to improve sagging approval ratings as the 2012 elections loom.
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