A Look into Congress Insider Trading
Since the 1960s, stock or commodity trading using insider information has been deemed illegal. However, as was revealed in a recent study by the Social Science Research Network, members of Congress has been for a long time using their access to private company informations for their own financial enrichment. These “insider information” can greatly affect prices in stock and they are being unfairly used by our governing body, the very same people who are supposed to ensure fair trade.What is happening is that members of Congress and their staff are accessing nonpublic information about companies to see how they will perform in the future (whether they will have their taxes lowered or raised, for example).
These Congress members, and onlineinsider even some Senators, then uses their insider information to buy shares on stocks that have been voted for funding, earning themselves thousands of dollars in the process.However, because these information did not come from the affected companies, it is not considered, legally speaking, insider information. In short, the members who use this information are exempted prosecution by the Securities and Exchange Commission (SEC). Members of Congress may even tip some other parties – their campaign contributors, for example –
and still there is nothing in law that says they are doing something illegal.Although there have been some actions to prevent this, the effect have so far been minimal. Congressman Brian Baird offered a bill years ago that would prevent insider trading by members of the Congress. But out of 435 members in the House of Representatives, the bill only had nine supporters; from the Senate, it had none. This lack of support is understandable as there are currently no investigators in Capitol Hill tracking the stock market activities of Congress members. And it seems nothing much will happen about the issue, mostly because the people don’t really know what is going on –
the US media has hardly put any coverage of the issue. Congressman Baird had commented that Congress insider trading allows Congress members the “possibility of making great amounts of money. In ways that aren’t illegal and ways that are hard to detect.”Filmmaker Francis Megahy has added that what these members of Congress who are using their official influence for personal gain are not just showing conflict of interest – they are downright committing a crime. “Everybody is very, very careful about that on Wall Street,” Megahy has commented, “You can go to prison for that, and you do.”The situation now is that the country’s lawmakers are freely allowed to do something that is absolutely illegal for anybody else to do. Of course Congress has the power to tell citizens what they can and cannot do – that is their job, after all. But the laws they prescribe need also to apply to them.