The question is, what if they want to build an elevator for their car at their vacation home in Aspen and need to pull out some cash, and just happen to do so immediately prior to a recession they received a briefing about? Surely “give me cash” and “invest some cash” are acceptable communication to an investment manager, but still could abuse the MNPI.
They can borrow money using the portfolio as collateral, interest free or pegged to inflation, to be repaid either when the stock is released or over time. Although, it'd be a bit more complex than standard collateral since there'd have to be a "margin call" mechanism, where assets in the portfolio have to be sold to cover the debt if they drop too far.
Re:Senate Stock Watcher
by cryptonector on Saturday April 11, 2020 @01:12PM
(#22842738)
The risk here is low. After all, the manager could easily have sniffed the coming recession and hedged against it. All assets do not lose value in a recession, you know.
Knowing only the returns the manager has yielded over several years tells the official very little about how the manager will perform in a recession, in a boom, or in a boring year.
Re:Senate Stock Watcher
by cryptonector on Saturday April 11, 2020 @02:20PM
(#22843164)
By the way, that's how it works in financial companies. There's no reason it shouldn't work that way for government officials.
Seriously, the way it should work is that elected and appointed government officials, as well as civil servants with potential access to material non-public information (MNPI) should all be required to use only investment accounts managed by a manager with full discretion and with whom the official does not communicate.