Without going to far out on a limb, I think that it is fair to say that a joint concern of both the Occupy and Tea Party movements is a search for ways to limit or end greed and corruption in public office. Not too surprising are recent revelations that folks in Congress are many degrees of magnitude wealthier than average citizens with the top ten wealthiest individuals in the House alone having net worths between $40,000,000 and $310,000,000. Again not too surprisingly is the fact that without exception a member of Congress sees their wealth grow dramatically during the time that they are elected and this is an issue for both the Democrats and the Republicans. http://www.cbsnews.com/8301-503544_162-20075586-503544.html?tag=contentMain;contentBody
One of the reasons for this increasing wealth is a huge gap in current law. Insider Trader rules prohibit everyone from trading stocks with non public corporate information about the stock. Not covered under current law is non public legislative information. So, for instance, if a lawmaker learns an upcoming bill will grant a company a large government contract, which could boost that company’s stock, he or she is free to buy that stock ahead of the bill’s public introduction. This form of “insider trading” is one of the reasons why there are so many wealthy members of Congress, CBSNews.com reported earlier this year. http://www.cbsnews.com/8301-503544_162-57325280-503544/senators-introduce-stock-act-to-stop-insider-trading-in-congress/
Sen. Scott Brown, R-Mass., today introduced the Stop Trading on Congressional Knowledge (STOCK) Act of 2011, which would prohibit members or employees of Congress, as well as executive branch employees, from using nonpublic information obtained through their public service for investing or any attempt at personal financial gain. Sen. Kirsten Gillibrand, D-N.Y., is introducing a slightly different version of the legislation on Wednesday.
“Members of Congress should live under the same laws as everyone else,” Brown said in a statement today. “If they trade on inside knowledge to line their own pockets, they should be punished. Serving the public is a privilege and honor, not an opportunity for personal gain.” The legislation would also require members of Congress and employees to report the purchase, sale or exchange of any stock, bond, or commodities future transaction in excess of $1,000 within 90 days. Gillibrand’s legislation would, in addition to enabling the Securities and Exchange Commission to prosecute cases of insider trading by members of Congress, also make such trading a violation of the House and Senate rules. Out of 975 federal entities, Congress and the Supreme Court are the only two that have no rules or laws prohibiting them from trading securities based on nonpublic information.
Congressmen can get away with “the type of insider trading that would send Martha Stewart to prison,” Craig Holman, government affairs lobbyist for the consumer advocacy organization Public Citizen, told CBSNews.com in June. “They go into hearings and confidential meetings with business interests, understanding new legislation is going to come out next week,” and are free to trade on that information.
The Stock Act is not a new idea and has been floating around for some time. Until this weekend’s 60Minutes report about congressional insider trading the bill had never been able to garner enough sponsorship to find its way to a committee hearing. Leadership of both parties have always been reluctant to kill the golden goose, and this inside information is just one of those sacred cows that have brought many benefits with little or no cost. Heightened publicity this time around may be a game changer this time around.
I would hope that this would be one of those issues that both the Occupy movement and the Tea Party movement could rally behind. It is one of those measures that is a real no brainer to anyone but members of Congress that stand to lose their investing advantage.