It ought to be illegal for members of Congress to buy and sell based on inside information ... but it is not illegal because Congress has exempted itself from insider-trading laws. In 2006, when Rep. Louise Slaughter, D-N.Y., introduced the Stop Trading on Congressional Knowledge - or STOCK - Act to prohibit members of Congress and their staff from trading stocks based on nonpublic information, her bill attracted only 14 co-sponsors. Peter Schweizer, a fellow at Stanford's Hoover Institution, believes that some in Congress see the public trust as a venture opportunity" that allows them to leverage information not available to the general public. Slaughter's STOCK Act would not stop members or staffers from dabbling in the markets. The legislation, however, would make Capitol Hill insiders subject to prosecution if they buy or sell securities based on nonpublic information. It also would cut into K Street's latest boutique business practice - "political intelligence" - that allows lobbyists to gather inside financial information which they can give to hedge-fund clients.
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