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Apple and Google Declare War – Here's the Secret Winner

Resident tech guru Michael Robinson and I are both big science-fiction fans. Michael likes traditional sci-fi stories, like those of Robert Heinlein and Isaac Asimov. My sci-fi interests are more focused on “Golden Age” radio dramas, “pre-code” comics, and old movies and TV shows… like The Twilight Zone and The Outer Limits.

And when Associate Editor Cris Skokna joined our team a few months back, Michael and I were so pleased to discover that he was a sci-fi guy as well that I jokingly dubbed the three of us as “The Trilogy.”

And the other day, Cris told me a story that I absolutely had to share with you…

  • Featured Story

    Congress Handing Out Stock Tips to Hedge Fund Managers

    As if trading on insider information gleaned from their legislative duties wasn't bad enough, now it turns out Congress has been passing that information on to hedge fund managers as well.

    That's helped many hedge fund managers make the same sort of lucrative bets in the stock market that has enriched members of Congress.

    Meanwhile, Congress isn't doing anything to help individual investors, who don't have access to insider information and would probably be fined or jailed for doing what their representatives have been doing for decades.

    "We the people need a new bill of rights from Congress," said Money Morning Capital Waves Strategist Shah Gilani. "I'm talking about our rights to control their indiscretions, lies, cronyism and the actions they take under cover of the protections of their offices."

    Washington's latest transgression was revealed Tuesday in The Wall Street Journal.

    New York-based broker-dealer JNK Securities Corp. arranges about 12 meetings a month between legislators and hedge fund managers.

    If the information discussed turns into a useful stock tip, the hedge fund must execute the trade with JNK so it can earn a commission. But as questionable as it all sounds, no one is breaking any laws.

    It boils down to "buying information from members of Congress in a perfectly legal way," Richard Painter, a former ethics lawyer for President George W. Bush and currently a law professor at the University of Minnesota, told The Wall Street Journal.

    Greed, Corruption and Lies

    In one instance, Conatus Capital Management scooped up 300,000 shares of Visa Inc. (NYSE: V) in the first quarter of 2010, knowing that a key provision harmful to the major credit card companies would not be included in the Dodd-Frank legislation. That tip came from a meeting with bill co-author Sen. Christopher Dodd, D-CT.

    "Hedge funds and other investors have found that Washington can be a gold mine of market-moving information, easily gathered by those who are politically connected," Sanford Bragg, CEO and President of Integrity Research Associates, told The Wall Street Journal.

    Both Republicans and Democrats defended the practice, telling The Journal that the discussions with hedge fund managers help them shape legislation.

    Clearly, Congress can't be trusted with market-sensitive information. And if you think the revelations in The Journal or the CBS News "60 Minutes" expose on insider trading in November will slow them down, think again.

    They have too much incentive to maintain the status quo.

    A study by the academic journal Business and Politics shows that over the long term, members of Congress beat the market by an average of 9% annually.

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