The Associated Press new agency has reported some interesting activities on the part of Alabama Representative Spencer Bachus - a US politician becoming increasingly notorious for his sometimes extravagant and on occasion factually challenged attacks on the industry.
Apparently Bachus has made many short-term investments whose profitability was directly impacted by political activity in Congress and the Financial Services Committee, of which he is a leading member. AP points out that while many members of Congress hold long-term positions in the stock markets, day trading on stocks directly influenced by Congress is considered both unusual and inappropriate, if not illegal.
The news agency has recorded numerous trades by the Alabama Republican in which he bought and quickly sold shares in companies that may have been affected by events in Congress, with some trades taking place in less than a week.
When approached with the trades by AP, the Representative refused to speak personally, instead leaving his spokesman to assure the news agency that his employer had never invested in banking or financial firms, and had been careful to stay within the legal limits placed on trading by Congressional laws on ethics.
Bachus' trades have reportedly been largely puts or calls - short-term margin purchases in which speculators expect a quick stock adjustment up or down, the essential insider trade bid.
The AP report reveals that Bachus bought shares in the Chinese company Focus Media last December, then two weeks later sold off the stock immediately following a price jump that was caused by a press release concerning a corporate acquisition. He also held Research in Motion shares for two weeks, selling for a profit after the company successfully lobbied Congress for patent protections.
James Cox, a law professor at Duke University specialising in corporate law and the ramifications of insider training, told AP that in his opinion the situation was unacceptable. "We get very upset about baseball players and other sports players who gamble ... because we're worried about the temptation that they might bet on their own games. I think this is the same problem."
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