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Murray Assails Moran on Insider Trading Allegations

by ARLnow.com November 15, 2011 at 10:20 am 2,935 62 Comments

Rep. Jim Moran (D) is among the congresspeople who got a not-so-flattering mention in a new book called Throw Them All Out, which purports to show a pattern of insider trading among our country’s lawmakers.

According to the book, and a Newsweek article, Moran’s stockbrokers sold shares in 90 companies following a confidential briefing Moran attended at the outset of the 2008 financial crisis. The briefing, featuring Treasury Secretary Henry Paulson and Fed chairman Ben Bernanke, outlined the breadth of the impending financial doom that gripped the country.

The newly re-formed campaign of Republican Patrick Murray, who’s hoping to unseat Moran in 2012, issued a statement about the allegations late last night.

Continuing his disgraceful pattern of actions, Jim Moran must be held accountable for his recently reported insider trading. It’s rich for a sitting Member of Congress to demagogue not just the American financial sector, but free market principles as a whole, while engaging in unethical trading. Our Representatives in Washington are trusted with sensitive information to better develop sound fiscal policies, not to protect one’s financial portfolio. Moran’s ability to dump shares in 90 companies immediately after a classified briefing by Ben Bernanke on possible economic downturn is unethical and immoral. Jim Moran finally must go.

America is paying the price for actions like Moran’s on a national scale. We cannot afford a political class that plays by different rules. I am running for Congress as an extension of my Oath to serve this nation; not to line my pockets in Washington while crying injustice in Northern Virginia.

  • GetReal

    It’s crazy that members of congress and staff can buy/sell stocks with out restriction/discloser/holding periods.

    • Ben

      Agree – although as congress makes laws regarding such a thing it will be like herding cats for them to change this…..

      • Bluemontsince1961

        Hmmmm…herding cats is probably easier.

  • drax

    This calls for a change in the law.

    • Burger

      Actually, it is call for a change to Congresses Conflict of Interests.

      What should be done is just like what a large law firm has – a stock trading clearance committee – that can give a congressman a thumbs up/down on the trade and have a list of companies or industries that congressman can’t not trade in.

      When I was with a large firm – 800+ attorneys – you sent an email to the committee stating what the trade was and in 5 minutes you get a response on whether you can trade it.

      This would also be open to the public to allow them to scan and review to see if there is some type of issue.

  • Alex

    In any other context this would be highly illegal, but in this context it is simply an immoral abuse of power because of the lack of laws to prosecute such conduct. Quite unbelievable that these same people will harp about how corrupt Wall Street is and then participate in the same practices they decry.

  • South Arlington

    Murray should be careful with his wording. I don’t believe the briefing was technically classified. Revealing details from the briefing to his broker would then be a crime if it had actually been classified.

    • Dave

      “Classified” is probably the wrong term, but it was definitely non-public information.

    • GetReal

      It doesn’t matter if the meeting was classified or not. It is still considered inside information if it’s material non-public information.

    • drax

      Nobody is saying he violated the law. The problem is that Congress is exempt from insider-trading laws.

      • South Arlington

        Hence the misuse of the word classified. Murray’s press release explicitly states classified, implying Moran broke the law by revealing “classified” details. This was not the case. Unethical? Yes. Illegal? No. Murray should revise his press release to be accurate.

        • TGEoA

          Pure speculation on your part.

          • South Arlington

            It’s not speculation. It wasn’t a classified national security briefing.

          • Lou

            Where did the term “national security” come up?

          • South Arlington

            Classification, in the formal sense, is meant to protect national security secrets. Murray’s erroneous usage of “classified” implies a state secret that was classified was shared (a criminal act). He can just change “classified” to non-public information.

          • Lou

            Sounds like you are the one drawing the implication. Don’t assume everyone is so simple minded.

            Besides that, we are talking about a congress that was about to act in reforming the financial system, and they were trading on the effects their legislation would have in the future. That’s about as manipulative as you can get.

          • drax

            South Arlington is correct. “Classified” has a pretty specific meaning that is misleading here.

          • Zoning Victim

            No, he isn’t correct. You’re both speculating. Do you guys really think they hold meetings like this and just ask a bunch of politicians to please not tell anyone?

            A: This information is either classified or it’s not. There is nothing that says this kind of information cannot be classified; in fact and according to the referenced Newsweek article, the meetings were Confidential, which is a classification of information. Therefore, “Confidential” is officially classified information, ranking 3rd on the classification list behind “Top Secret: and “Secret.” If it’s not classified, then it is public information and could be gotten with a simple FOIA request. Giving away information classified as confidential by the US government is indeed criminal.

            B: You do not have to reveal classified information to engage in insider trading. Example: “Hey Billy Broker, sell all of my stocks in sector XYZ; don’t ask me why, just do it.”

          • Zoning Victim

            For clarity sake, the FOIA would not apply to Congress itself, but to any government agencies. Information doesn’t have to be from a national security briefing, it just has to be something that would adversely impact national security. I’m not sure if the government actually classified that information that way, but I doubt anybody on here knows that for sure. The Nixon tapes about Watergate were classified for a very long time despite being only about 12.5 hours’ worth of conversation and having nothing defense related in them.

            At the very least, it’s a violation of ethics to leak information from these confidential hearings, but like I said, it’s very easy to engage in insider trading without actually leaking specific information.

          • TGEoA

            Absolutely speculation, unless you have direct knowldge of it (which you already admitted you don’t)

          • Mr. Brown

            It’s not speculation. The term “Classified” pertains only to national security related issues, and can not be correct when talking about economic reporting.

          • Lou

            I thought Obama said our economy was crucial to our national security. Do you know the material was not classified?

            Seriously, we can go whichever direction you want to take this. You’re splitting hairs about the messenger and ignoring the culprits. That’s just weak.

          • Mr. Brown

            Economic information about failing companies wouldn’t be classified, unless we were using the intelligence community to spy on companies, which would be the bigger story here.

            Information is classified based on how it is collected, not how scary or damaging it could be.

            So, in answer to your question, I believe with 99% certainty, based on my experience dealing with how and why things are classified, that the material was not classified.

          • drax

            Come on, Lou. It’s highly unlikely that a briefing by Treasury or Fed officials on the state of the economy to members of Congress would be “classified” in the national security sense of the term.

          • South Arlington

            Lou, any politician/economist/analyst with half a brain understands the economy is vital to national security. It doesn’t mean it was classified. Crop reports put out by Department of Agriculture affect the economy but are not classified. I didn’t ignore the culprits. Clearly, its unethical of Congress to trade with insider information, as I stated earlier. If you’re going to be a candidate for Congress, you should be expected to state facts, especially in written communications with the public that are usually vetted through campaign/party staff. It’s a simple fix for Murray to change it to non-public information.

            Instead of blustering like you and TGEoA, assuming you support Murray, I’d push for him to improve his campaign materials to be accurate so that issues like this don’t get arisen, taking the focus off his message.

          • Lou

            Ok, lets go this way with it: what’s the difference between a classified briefing and a confidential briefing?

          • TGEoA

            @brown

            No, the term “classified” designates information access/handling. There is NO standalone “classified” system. National security is not the only area that gets classification. FOUO is often tagged to economic meetings & documents.

          • South Arlington

            Classified information is sensitive information to which access is restricted by law or regulation to particular groups of persons. A formal security clearance is required to handle classified documents or access classified data.

            When a president meets with his advisors, the briefings are generally not at a classified level (the President’s Daily Briefing from the intelligence community would be a notable and regular exception). They are probably sensitive, but a meeting with a treasury secretary wouldn’t fall under something with a need for classification. There are certainly no sources or methods to protect when speaking of domestic economics, unless, as Mr. Brown stated, the IC was spying on companies, which as he stated again, would be the bigger story here.

          • drax

            When used in the technical sense, “classified” means something that a government official with knowledge of it would be violating a law by disclosing. It’s not just some random term. It means much more than just confidential.

            Now, one could use it in a more general sense, perhaps, but that’s misleading when talking about someone in government who might have access to actual classified material.

            Unless this briefing really was classified, which is highly unlikely, the word shouldn’t be used in this context.

          • Bender

            Political “hack” and “shill” have specific meanings too.

            And they are quite applicable to the discussion here attempting to defend Moran.

          • South Arlington

            Bender, stop being a shill. No one is defending Moran’s (or pretty much most Congressman, regardless of party) unethical behavior. The discussion is about whether Murray’s campaign is being accurate and above board in his accusations’ wording.

          • drax

            “Bite me” also has a specific meaning, Bender.

        • Smoke_Jaguar4

          As a retired Colonel with an Intelligence background, Mr. Murray should know exactly what “classified” means. In this instance, financial information is protected from public release under FOIA, exemption #4. Classified information (pertaining to national defense/foreign policy) is covered under FOIA exemption #1. In general, the term “classified” pertains to national secrets and is subject to very specific laws and penalties. This appears to be a very sloppy attempt at throwing mud and seeing if it sticks.

          • Burger

            No, nothing is simply called classified.

            It is classified: Top Secret, Secret, confidential, etc.

            Here Moran took confidential information and used it to dump stocks.

            Regardless of his word use Moran is still a dirtbag.

      • Meke

        Unfortunately….Congress is exempt from almost all it’s own laws…until recently they didn’t even pay minimum wage to the manual laborers (ie cafeteria staff) up on the hilll

  • Bluemontsince1961

    The law should be changed so Congress is not exempt from insider trading laws.

    • Ben

      And who makes the laws? Congress……

      • Bluemontsince1961

        I know. Natch, Congress won’t change it.

        • drax

          Congress has certainly done just that before. The “Contract with America” contained a number of ways that Congress applied laws to itself that it was previously exempt from, such as employee-protection laws for congressional staff, and Congress passed those. It can police itself, sometimes.

          • Ben

            Doubtful when said law would cut significantly into their pocketbooks.

          • Bluemontsince1961

            I second that. I have doubts that representatives/senators of EITHER party would enact/approve/pass any law that would cut into their pocketbooks.

  • NoVapologist

    Insider trading by members of Congress and their staff has been studied, documented, and reported for years. Nobody cares. As long as your guy is a member of your party of choice, then ethical problems are a minor inconvenience at most.

    There is a great study out there showing that a portfolio made up of what Senators bought and sold in the 1990s outperformed the market by an average of 12% a year. By contrast, Warren Buffet could only manage about 2% annual outperformance.

    • Zoning Victim

      Well, not enough people care anyway, which is very unfortunate.

  • Bluemontsince1961

    “Insider trading by members of Congress and their staff has been studied, documented, and reported for years. Nobody cares. As long as your guy is a member of your party of choice, then ethical problems are a minor inconvenience at most.”

    Sadly, that seems to be the case.

  • I think 60 Minutes did a good job on reporting this problem. I support their conclusions and feel Moran, who I generally like very much, did financially benefit by inside information. This needs to be corrected.

    • Burger

      If you like Moran, you must not be a very ethical person because Moran is constantly being dragged before the ethics committee.

      he is generally considered one of the worst congressman on ethics around. So this doesn’t surprise me in the least.

    • Myles

      Moran is nothing but a thug with quite a history so not sure what there is to like. He engaged in barroom brawls as mayor of Alexandria, and assaulted a child on the street a few years ago while a member of Congress. He’s one who has been in Congress too long.

  • Arlington17

    Putting investments in a blind trust upon taking office is the best idea I have heard so far. However that won’t prevent them from telling friends and donors the same info.

  • Smoke_Jaguar4

    I hate negative campaigning. Telling me why your opponent does not deserve re-election is not the same as why should I vote for you. Reviewing his blog, it’s almost entirely dedicated to bashing Moran. The one area where he does present his views, under “issues”, is boilerplate Republican platforms, circa 2006. He even iterates support for the line item veto, something which Republicans grew strangely silent on after Obama won in 2008.

    There is a distinct difference between being the part of the opposition versus being a leader, something Mr. Murray needs quickly learn.

    • Bluemontsince1961

      Agreed. I’d prefer Murray to present why I should consider voting for him instead of Moran by providing his ideas/plans on what he would do for transportation and economic issues for our district. Tell me what you would do for me, not just tell me how awful your opponent is.

      • Steve-O

        Perhaps if you were better at listening instead of fixating on a clearcut ethics violation, you’d be better served both intellectually and politically. Instead you’re probably the same schlub that praises the Democrats when they continuously bash Republicans because they have no record of merit to run on.

        • Bluemontsince1961

          Excuse me! I find fault with BOTH DEMOCRATS and REPUBLICANS, and “bash” both of them!

          As for the “schlub” remark, kindly go and kiss my cold instant grits, putz!

  • P Johnson

    I think Moran represents us perfectly.

    What’s “ethics” so long as he’s representing us?

  • Chris

    Arlnow is good for local news and political hackery and propaganda. Arlnow should do a better job distinguishing between the two.

  • jim

    PJohnson, so it is okay if Moran is a scumbag as long as he’s our scumbag? Is that what you mean when you say that Moran represents you perfectly? Jeez……………

  • Valerie

    FROM NEWSWEEK
    Indeed, Schweizer reports that, during the debate over Obama’s health-care reform package, John Boehner, then the House minority leader, was investing “tens of thousands of dollars” in health-insurance-company stocks, which made sizable gains when the proposed public option in the reform deal was killed. (“There are laws and there are rules of the House, and they should be followed,” a Boehner spokesperson tells Newsweek. “The speaker does not make those trades himself. He has a financial adviser in Ohio.”)

    One of the more dramatic episodes in the book recounts the trading activity of Republican Rep. Spencer Bachus, of Alabama, who, as the ranking member of the House Financial Services Committee, was privy to sensitive high-level meetings during the 2008 financial crisis and proceeded to make a series of profitable stock-option trades.

    Bachus was known in the House as a guy who liked to play the market, and in fact he was pretty good at it; one year, he reported a capital gain in excess of $150,000 from his trading activities. More striking is that Bachus boldly carried forth his trading in the teeth of the impending financial collapse, the nightmarish dimensions of which he had learned about first-hand in confidential briefings from Treasury Secretary Henry Paulson and Fed chairman Ben Bernanke. 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. 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.

  • nota gain

    Where is the SEC when it is needed. Probably insidering too.

    • drax

      Congress is more or less exempt from insider trading laws and therefore SEC regulation too.

  • P Johnson

    No, no, Jim, I don’t mean that at all; though I’m glad you asked.

    Read the comments: the etymology of the term “classified,” the criticisms of the press release, Valerie’s cut and paste job of a Newsweek article about someone else, and comments about “negative” campaigning.

    Does not Moran represent us? Is this board not illustrative of OUR values?

  • Meke

    Moran is a slippery fellow…I honestly can’t vote for him…and I am a pretty hardcore Democrat. I skip over voting for him when he is on the ballot, just can’t do it

  • BoredHouseWife

    doesn’t the 27th amendment pertain to exempting congresscritters from laws that apply to normies?

    • BoredHouseWife

      let me clarify, pertain that they cannot exempt themselves from laws created for regular joes?

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