The Collegio Pittsburg's student voice since 1916
Nash Trumbly Reporter
Insider trading: the practice of buying or selling securities based on non-public information. It is considered illegal in the United States and is regulated by the Securities and Exchange Commission (SEC). But in the U.S. congress, where lawmakers often have access to sensitive information that could impact the stock market, insider trading is unregulated.
Insider trading in Congress is not a new problem. In 2011, a report by CBS revealed that several members of Congress had engaged in insider trading. The report found that lawmakers, including Speaker of the House John Boehner and House Minority Leader Nancy Pelosi, had purchased or sold stocks shortly before major policy announcements were made. According to a 2022 report by the New York Times, 97 lawmakers reported trades in companies that were directly influenced by the decision made by their congressional committees. These lawmakers had access to confidential information that allowed them to make significant profits from their trades.
Unfortunately, insider trading in Congress can be difficult to prove. Members of Congress are not required to disclose their personal financial transactions, and they are not subject to the same insider trading rules as the public. While it is illegal for corporate insiders to trade based on non-public information, Congress has exempted itself from this rule.
This exemption has been a source of controversy and has led to calls for reform. The Stop Trading on Congressional Knowledge (STOCK) Act was passed in 2012 to address this issue. The act requires members of Congress and their staff to disclose any stock trade within 45 days and prohibits them from using non-public information for personal gain. However, the STOCK Act has been ineffective in preventing insider trading in Congress.
One reason the STOCK Act has not been effective is that it lacks enforcement mechanisms. The SEC is responsible for investigating insider trading in Congress, but it has limited resources and has not been able to prosecute many cases. In addition, the act only applies to stock trading and does not cover other forms of insider trading, such as real estate or commodity trading.
The main issue with insider trading in Congress is that it goes against the principles of fairness and transparency. Members of Congress are elected to serve their constituents and make decisions that are in the best interest of the public. When they use their position to make personal gains by trading stocks based on non-public information, it undermines the public’s trust in the government and creates a perception of corruption.
Another problem with insider trading in Congress is that it creates a conflict of interest. Lawmakers who trade stocks based on non-public information may be more inclined to support policies that benefit their personal investments rather than the public interest. This can lead to legislation that is skewed in favor of special interests or wealthy individuals.
Insider trading is a significant problem in Congress that undermines the principles of fairness and transparency. It creates a perception of corruption and erodes the public’s trust in the government. While the STOCK Act was a step in the right direction, it lacks enforcement mechanisms and does not cover all forms of insider trading. To address this issue, Congress needs to take stronger action to prevent insider trading and restore the public’s trust in the government.