Business Insider has a report about Peter Schweizer's new book Throw Them All Out: How Politicians and Their Friends Get Rich Off Insider Stock Tips, Land Deals, and Cronyism That Would Send the Rest of Us To Prison. The Business Insider article is headlined, "Book: Rahm Emanuel Dumped Tons of Freddie Mac Stock Days Before It Collapsed." The article says, "lawmakers are exempted from the insider trading laws they impose on private traders."
In fact the book itself says the picture is a bit more complex. The book (whose text also includes two nice quotations from FutureOfCapitalism.com) says, "When it comes to current SEC insider trading laws, there is a spirited debate going on among legal scholars as to whether current laws actually apply to Congress. Many contend that they don't, because our legislators are not fiduciaries (that is, client representatives) and are therefore not obligated to keep secret information secret. Other scholars argue that SEC laws on insider trading do apply to members of Congress. They claim it is illegal under Rule 10b-5 of the Securities Exchange Act, which is a general antifraud provision that prohibits deceptive conduct 'in connection with' the purchase or sale of securities."
The book goes on to note that "the political reality" is that the SEC is unlikely to enforce the law against Congress if it does apply, because Congress funds the SEC and the Senate confirms SEC commissioners.
Walter Olson has a post up at the Cato Institute: "Yes, it's legal."