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Insider Trading: It’s Time to Close this State Loophole

December 28, 2011 By Joe Atkins, Guest Commentary

Did you know it is perfectly legal in Minnesota for state legislators to engage in insider trading? I’m sorry to say that’s not a misprint. It is, in fact, completely legal for a state lawmaker to use confidential information gained at the Capitol for personal gain.

That’s wrong, and it ought to be fixed. I expect to introduce legislation on the first day of the 2012 legislative session to do just that.

In Minnesota, if you're a judge, it's illegal to engage in insider trading. If you're the governor, or work for the governor, it's illegal to engage in insider trading. If you're a CEO or a business person or a private citizen, it's illegal to engage in insider trading. But if you are a Minnesota state legislator, you can use confidential information gained at the Capitol for financial gain, and there’s no law or rule to prohibit it.

As many Capitol insiders will confirm, the stock prices of certain Minnesota-based companies can rise and fall dramatically depending upon the outcome of key votes at the Capitol. 3M stock is one example. Similarly, Canterbury Park Holding Company, which is proposing a “Racino” to fund various projects, including a stadium for the Minnesota Vikings, has seen its stock suddenly soar and swoon based on action at the State Capitol.

When legislators know the likely outcome of committee or floor votes before the general public does, or have access to key information before anyone else does, it places those legislators in a position to benefit financially by buying a stock expected to rise, selling or “shorting” a stock expected to fall, or buying land that will be necessary for a certain project or public improvement.

That’s wrong, it’s unethical, and it ought to be illegal.

It’s worth noting is that I’m not suggesting any particular Minnesota legislator is engaging in insider trading. I don’t know if it is occurring. What I do know, however, is that legislators should not be able to legally do something that is illegal for our constituents to do.

This issue is no different than any other law. If traffic laws or criminal laws or financial laws apply to our constituents, they ought to apply to legislators. Certainly, laws prohibiting the use of confidential information for personal financial gain ought to apply to those who make such laws.

I applaud Rep. Tim Walz for offering similar legislation that would apply to members of the U.S. Congress. Congressman Walz’s legislation, which sat dormant for quite some time, has started to make progress following a “60 Minutes” expose in November that raised questions about stock trades involving some prominent Congressional leaders.

Hopefully, it won’t take a scandal to pass a proposed prohibition on insider trading by state legislators. It’s the right thing to do, and I’m hopeful the Minnesota State Legislature will work to correct this policy early in the 2012 legislative session.

Joe Atkins (D-Inver Grove Heights) is a member of the House Ethics Committee and the House Commerce Committee. He can be contacted at .(JavaScript must be enabled to view this email address).

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  • Dan Conner says:

    December 30, 2011 at 10:14 am

    This is just another indicator of our corrupt Congress/government.  They set rules for others that they somehow feel to be exempt from.  Is that a feeling of “entitlement?”  Is that an entitlement class or not?

    Congress not only needs to be held to the same standards as everyone else, they need to be held to far higher and more stringent standards.  They are supposed to be our leaders right?  Does that mena leading us into corruption?

    There are too many legislators leaving office being far more welathy than when they first took office.  Something stinks there…if it walks, looks, and quacks like a duck, isn’t it a