The access advantage — the phone call from a former Treasury official, the lobbyist who saw the draft rule an hour before it hit the Federal Register, the campaign donor who sat in the room while the sanctions package was written — that is the real insider trade, and it does not require a senator’s brokerage account. Pete Ricketts’s op‑ed “It’s Time to Ban Congressional Insider Trading” in National Review targets a genuine problem. The polling is right, the public trust is shot, and the stories about lawmakers trading on privileged information are real. Ricketts proposes to ban members of Congress from buying new stocks, require seven days’ advance notice of sales, and fine violators ten percent of the transaction. On paper, that looks like a fix. But the bill is a narrow, mostly symbolic piece of legislation that leaves the machinery that moves information from public agencies to well‑connected private hands completely intact. The Nebraska senator, whose family fortune comes from TD Ameritrade, knows exactly what the STOCK Act doesn’t touch.
The seven‑day advance disclosure Ricketts proposes is a genuinely good idea — sunlight is a fine disinfectant. And if the bill passed tomorrow, it would close one specific loophole: the lawmaker who profits from a closed‑door committee briefing. Fair enough. But that is the tip of the iceberg. The real insider trading does not happen when a member of Congress trades on a tip from an intelligence briefing. It happens when a hedge fund gets a phone call from a former Treasury official who knows what the sanctions package says before it is released. It happens when a lobbyist who saw the draft executive order gives a heads‑up to a donor who then moves millions an hour before the announcement. It happens when a private equity firm hires the regulator who wrote the enforcement rule and pays her to “consult” — which in practice means telling them which firms are about to get hit.
Ricketts frames the problem as a question of congressional ethics. It is not. It is a question of who can afford to buy access to the information the government generates before the rest of the country sees it. The answer is: the people who fund the campaigns, hire the former officials, and pay for a seat at the table where the rules are written. A member of Congress trading on a committee briefing is a symptom. The disease is the information pipeline that runs from the agencies to the connected, and a bill that only disciplines the symptom does not touch the disease.
The penalty structure in the bill is laid out to sound tough — a $2,000 floor or ten percent of the transaction, whichever is greater, plus forfeiture of profits. The op‑ed offers its own example: a $1 million trade would trigger a $100,000 fine. That is a real number. But it is not a deterrent for someone whose net worth sits in the tens of millions and who stands to gain far more than that from the information asymmetry the fine is supposed to police. A $100,000 fee on a $1 million trade that captures a thirty‑percent market move is the cost of doing business, not a prohibition.
So what do we build instead? A real insider‑trading regime starts with a much broader definition of what counts as material non‑public government information — not just the stuff in a committee briefing, but the draft rule, the enforcement target list, the sanctions memo, the interagency negotiation that a regulator will later monetize. It applies the same disclosure and cooling‑off rules to everyone who touches that pipeline — Treasury staff, White House economists, regulators, lobbyists who receive draft regulations — not just members of Congress. That means a five‑year cooling‑off period before a former enforcement director can join the hedge fund she used to oversee, and it means real funding for the SEC’s enforcement division so that the existing rules have teeth instead of sitting on the books like a parking sign everyone ignores. It means treating a campaign contribution that buys a meeting with the rule‑writer as exactly what it is: the purchase of advance information, with the same reporting requirements and the same penalties as any other trade on non‑public material.
That regime is harder to build than a bill banning congressional stock trades. It runs against the interests of the people who fund campaigns on both sides. But it is the actual machine, and the actual machine is where the real money moves — not in the eight‑thousand‑dollar trade someone files six months late. Ricketts’s bill disciplines the front door and leaves the whole side of the building open. We already know what happens when you only lock the front door.