Legislators aren't insiders. Insider trading requires being an employee, board member, or otherwise owing a fiduciary duty to the company. The crime hinges on breaking that duty.
It does _not_ mean merely trading on so-called "insider information", unless you're in cahoots with an insider who will benefit directly or indirectly.
If it were otherwise, trading on a "hot tip" about a stock could put anybody at risk of federal felony charges, no matter how far removed they were from the company. That would be ridiculous.
Insider trading also requires trading on material, non-public information. Few employees have access to that; usually only C-level executives and board members have that kind of information before it's made public. Many of the trading window restrictions imposed on you by your employer aren't required by the law or SEC regulations. Often it's to maximize the window that large investors and stock holders (including executives, through their trusts!) can profit on big movements, without legions of employee stock option holders raining on their parade.
That said, the SEC can be super aggressive about insider trading, whether or not any court would ultimately permit the charges to stick. They'll go after people with a noose in one hand and a slap on the wrist in the other; most sane people know which to choose. Racking up plea deals makes the SEC look effective at policing the market when in fact they're anything but. Which is why the decision a couple of years ago by the 2nd Circuit reaffirming the law of insider trading really upset the SEC.
Honestly, I'd rather that all Congressmen's investments were made public. Unlike the law discussed in the article, it could be anonymized before publication for all I care. But transparency would make it less profitable for Congress to trade on insider information because people could follow and mimic their trades. And big corporate investors might then pressure companies to stop disclosing so much information. That'd be a far preferable state of affairs than trying to criminalize trading on non-public information. Everybody and their Uncle tries to trade on non-public information; that's exactly how the market is supposed to work--provide a profit motive to uncover non-public information and effectively make it public by pricing it into the stock.
And a Congressman trying to subvert the transparency rules provides much more clear-cut culpability. Otherwise there's too much plausible deniability regarding the how, what, and why of their trades.
