A Senator who represents Long Island City, where Amazon plans to build another headquarters, has drafted legislation that would essentially make it illegal to buy or sell real estate based on non-public government action, according to a report from The Wall Street Journal.
If the law, which was proposed by Senator Michael Gianaris, is passed, the transactions would be a felony punishable by up to four years in prison. The contention is that the housing market in Long Island City jumped in value due to Amazon employees shopping for condos before the company announced the move.
The proposed law is comparable to the federal one, which prohibits someone from buying stock in a company based on what is commonly called inside, or non-public, information.
“Insider trading is illegal in the stock market, but in real estate it is not only legal, but celebrated with champagne,” Real Estate Attorney Adam Leitman Bailey told The WSJ.
Amazon’s move to New York, which was announced on Nov. 13, was worked out with city officials who signed nondisclosure agreements, an arrangement made with other potential cities as well.
The housing market in Long Island City sprang to life after the announcement, and in recent weeks, 30 deals were made at an 11-story apartment building called The Galerie, according to Brendan Aguayo, a senior managing director at Halstead Property Development Marketing.
Another 25 possible buyers are on a waiting list for apartments pulled from the market while developers raise prices. Two Amazon employees started looking at the building before the announcement was made, Aguayo said. He declined to identify them.
In a statement, Amazon said they don’t have evidence that anyone did anything before the announcement was made.
“We announced the locations to employees at the same time as it was announced publicly. We employ more than 4,000 in New York City that live and work in the tri-state area. Amazon has no evidence that any employee who may have made a property purchase in the locations before the announcement had any advance knowledge of the location selections,” the company said.
Sen. Gianaris said he would introduce the bill at the start of the new session in January.
“There is no reason that trading on inside information on stocks is illegal, but allowing it for a commodity like real estate is allowed,” he said. “We need a change in law to clarify that this is not okay.”