When Wall Street does insider trading, they do it big. Think about it: the latest big insider trading scandal involving now defunct hedge funds Level Global, Dell Computers, and Diamondback Capital allegedly netted the funds $57 million.And then there’s Raj Rajaratnam — he may well have become a billionaire on insider trades.
All of that indicates that insider trading, while illegal obviously, can be very lucrative. So today when we read the Washington Post’s details about insider trading accusations levied against House Financial Services Committee Chair Spencer Bachus (R-Ala.) we could only reason that IF he did this, he was rotten at it, frankly.
A statement provided by Bachus’ broker, Fidelity Investments, shows that he made $30,474 off of short-term options trades during the time in question 2008. Here are the specifics via WaPo:
As President George W. Bush’s stimulus bill was being crafted in summer 2008, Bachus bet Burlington Northern Railroad stock would go up, then he cashed out that July for a $16,588 profit. In August, he made the same bet but lost $2,900.
The day after Bachus participated in a closed-door briefing with former Treasury Secretary Hank Paulson and fed Chair Ben Bernanke in September of 2008, Bachus traded “short” options, betting on a broad decline in the nation’s financial markets, and collected a profit of $5,715. Also that day, he cashed out options in which he had bet that General Electric stock would rise, and collected a $12,713 profit, before GE’s stock price started to tumble…
The following October, Bachus bet the market would go up and lost $21,558.
Now that you know the details, you have to admit that’s chump change compared to what goes down on Wall Street.
Bachus admits that he used to trade as a “hobby” back when he was a politician in Alabama but he also says he stopped when he got to Congress in 1995. And, according to his financial disclosures, his own personal wealth declined from up to $2.3 million to up to $1.1 million during that time.
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