Congress needs to stop allowing members to engage in insider trading

Congress needs to stop allowing members to engage in insider trading

If you want to get into your bank account, top up your balance digitally, and then use that new balance to buy things, it’s called fraud.

When the Federal Reserve does that, it’s called monetary policy. If you are going to offer money to a person in a position of power for a positive result or treatment, it will be called bribery. When big companies do this with the US government, this is called lobbying.

Compete with bills through the senses. Introduced HAWLEY AND OSSOFF BANNING LAWMAKER STOCK TRADING

If you are going to buy stocks in advance to learn non-public information or make decisions that affect stock outcomes, it is called insider trading. When Congress does, House Speaker Nancy Pelosi calls that part of the “…free market economy.”

In the case of House Speaker Pelosi, owning and trading shares has made her family millions of dollars.

While there was an intellectual argument I made before about insider trading to get information to the market more quickly to improve market efficiency, our current markets are nothing like free, fair and efficient markets. Even if you could argue that there is a benefit to making insider trading legal, it is not legal today.

Furthermore, this potential legitimacy would not make sense in all situations; Disputes made by those in government trade based on decisions they influence create moral hazard, not efficiency.

Pelosi defends rights of trade lawyers despite media strife

House Speaker Pelosi was recently asked about the possibility of banning members of Congress and their family members from owning individual stocks as a way to avoid such a potential conflict of interest.

As noted in the segment above, she responded, “We are a free market economy. They should be able to participate in that.” While I would like the United States to be a free market economy, we have turned more toward patronage and central planning, thanks to our ever-growing government.

Congress is certainly not part of the free market when it engages itself – without competition – in all kinds of law-making and capital-allocation decisions.

FILE – House Speaker Nancy Pelosi of California, listens to a question from a reporter during a news conference on Capitol Hill in Washington, Thursday, Oct. 28, 2021. (AP/AP Newsroom)

Congress has to set the agenda for the laws, and it is also privy to other confidential and non-public information. These activities affect, in the short term and often in the long term, the market in general and the price of shares of publicly traded companies. That members of Congress take advantage of that is in any case a conflict of interest.

This should be a nonpartisan issue that Obama-era legislation was supposed to prevent. In 2012, the Congressional Knowledge Stop Circulation (or “Stock”) Act was passed as a way to prohibit people in government with access to nonpublic information and the power to make laws from engaging in the trading of that information and power — in layman’s terms, even Do not derive personal benefit from their position.

Arizona Senate candidate calls for ban on congressional ownership and stock trading on ‘Tucker Carlson Tonight’

The Stock Act requires members of Congress and their employees to report all trades in securities within 45 days of trading. However, this law, at least, is poorly enforced. In the event of violations, the penalty shall be a farewell. It usually results in fines of no more than $200. A report by Insider found that 52 members of Congress from both major political parties failed to fully comply with the law and report trades within the time period as required by stock law.

FILE – US Senator John Osoff (D-Georgia) walks through the Senate subway at the Capitol during a vote on December 6, 2021 in Washington, DC. (Anna Moneymaker/Getty Images/Getty Images)

Members of the Federal Reserve and many members of Congress are trading under conditions that, if not direct insider trading, certainly create a perception of a significant conflict of interest.

Two regional Fed chairs, Robert Kaplan and Eric Rosengren, revealed active stock trading in 2020, while the Fed made decisions about historical intervention in the markets, including major asset purchases. After these disclosures appeared, these two gentlemen announced their retirement, and in October of 2021 the Federal Reserve introduced, “…a broad set of new rules that will prohibit the purchase of individual securities, restrict active trading, and increase timeliness of reports and public disclosures from by federal policy makers and senior officials.”

NBC Broadcasters Reach Out to NANCY PELOSI to Comment on How Lawyers Can Trade Individual Stocks

This week, Federal Reserve Vice Chair Richard Clarida announced his early resignation as well, after scrutiny of his business and disclosures.

Members of Congress also actively traded during that time, as well as many other times. Senators Feinstein, Loeffler, Inhoff, and Bohr were actively investigated by the Department of Justice, but no criminal charges were brought. The Securities and Exchange Commission is reportedly still investigating Burr and his son-in-law over deals made after Congressional coronavirus briefings for the first quarter of 2020.

Speaker Pelosi and her husband’s record of making millions in the market is so strong that retail investors have taken action to track and simulate their trades. An unusual online website has revealed the millions that Peluses and other members of Congress made through individual stocks, including showing Peluses and other members of Congress with returns that outperformed the S&P 500 for 2021.

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according to Insider, retail interest in Pelosi’s trading spiked when news emerged that the speaker’s husband made $5.3 million by exercising Google’s call options ahead of a regulatory antitrust vote by the House Judiciary Committee in the summer of 2021. The speaker’s husband was actively trading On the call were options in a variety of individual names, including in late 2021 where up to $3.5 million worth of purchase options for five securities including Disney and Alphabet were revealed by Pelosi. Put options give the buyer the right to buy a specified number of shares at a future price on or before a specified date.

Even federal judges are involved in the lawsuit. A Wall Street Journal report found that between 2010 and 2018, 131 federal judges failed to disqualify themselves from 685 lawsuits in which they or their family members had a financial interest via stock ownership.

Against the backdrop of the Federal Reserve and the government enabling the historic transfer of wealth from Main Street to Wall Street, such trading by real insiders and influencers is not a good look. How does the average American participate in creating wealth when all the elites do is take care of themselves?


Americans believe that both Washington and Wall Street have created a “rigged game”. Retail investors rallied to try to protest and fight back. Certainly many Americans despair about the ever-increasing role of government and the cronyism that has enabled it.

Many members of both the House and Senate have or seek to introduce bipartisan legislation to limit this practice; Some proposals target deliberation specifically by members of Congress, while others, such as those just introduced by Senators Josh Hawley and John Osoff, extend to members of Congress’ spouses and/or their families. It remains to be seen if they can get their powerful teammates who have made good use of this practice on board.

Preventing Congress and others in meaningful government positions or neighboring government from trying to profit directly from the laws they make, the policies they influence, or the information their job gives them access to, shouldn’t even be a moot point. They can use blind credit or just hold mutual funds or ETFs without actively trading while they are in public service.

The American people are tired of being treated like chumps. It is time for elected officials to stop placing themselves and their interests above those they are supposed to represent.

Carol Roth is a former investment banker, entrepreneur, and author of the new bookThe war on small businessBrooside Books (June 29, 2021) and the New York Times bestseller “The Entrepreneur’s Equation”.

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