At the inception of self-government in our glorious Country, protecting and fighting for the Constituents of your home State in the U.S. Congress was an honor and a great responsibility. Imagine the days before the Industrial Revolution, when members of Congress traveled by horse and buggy, often for days if not weeks, to the Nation’s Capital from their home States. Leaving their farms and businesses behind to selflessly represent their Constituents, serve their terms and go home to tend to their personal affairs. Looking at our current Congressional members, serving career long terms and becoming insanely wealthy in the process, where did it go wrong?
The amassing of personal wealth amongst our elected representatives has been an issue for as long as I’ve been alive, and I’m sure it was an issue long before I was born. The use of governmental insider trading knowledge has been an attractive incentive for persons to “serve”. In fact, it was such an issue that the Stop Trading on Congressional Knowledge Act of 2012, also known as the STOCK Act, was passed by Congress, but just barely. The Law was incepted in an attempt to combat insider trading and conflicts of interest among their own Members in the House and Senate and to force lawmakers to be more transparent about their personal financial dealings. A key provision of the law mandates that lawmakers immediately and publicly disclose any stock trade made by themselves, a spouse, or a dependent child.
However, in the years that have passed, the STOCK Act has proven to be a paper tiger.
“Insider and several other news organizations have this year identified 52 members of Congress who’ve failed to properly report their financial trades as mandated by the Stop Trading on Congressional Knowledge Act of 2012, also known as the STOCK Act.”
The violators of the STOCK Act have been from both political parties, including House Representative Susie Lee, a Democrat of Nevada, House Representative Pat Fallon, a Republican from Texas, Senator Dianne Feinstein, a Democrat from California, and Senator Tommy Tuberville, a Republican from Alabama, just to name a few.
The most egregious offender of the STOCK Act is House Speaker Nancy Pelosi.
“House Speaker Nancy Pelosi decries corporate greed, but that hasn’t stopped her from raking in as much as $30 million personally from insider stock trades on the very Big Tech companies she oversees in Congress.”
The failure to comply with the STOCK Act by these members of Congress offer lame excuses including ignorance of the law, clerical errors, and accountant mistakes. The penalties assessed against these offending members are often light or non-existent. The monetary penalty is unusually small, set at $200 as the standard amount. However, the fines have often been waived by House or Senate Ethics Officials, and business goes on as usual. Even though ethics watchdogs and even some members of Congress have called for stricter penalties or even a ban on federal lawmakers from trading individual stocks, these ideas have been squashed before they hit the main floor.
However, a stronger bill has been introduced by House Representative James Hines, a Democrat from Connecticut. The H.R.2655 – Insider Trading Prohibition Act, first introduced on 4/19/21, simply states:
“Insider Trading Prohibition Act
This bill generally provides statutory authority for the prohibition against securities trading, as well as related communications to others, by a person aware of material, nonpublic information. The bill further provides, for purposes of establishing a violation of this prohibition, that it is not necessary for such a person to know specifically how such information was obtained or whether a personal benefit was paid or promised.”
Although this bill passed the House on 5/18/21, and has bi-partisan support through House Representative Kevin McCarthy it has been stymied in the Senate. As of May of 2021, the bill was received in the Senate and referred to the Committee on Banking, Housing, and Urban Affairs, where it still sits to this day.
The ever out-of-touch House Speaker Nancy Pelosi has been scrambling to crush bipartisan efforts to ban stock trading by members of Congress, which is no surprise, as she’s made millions during her career in politics. After decades in “public service”, Pelosi’s family invested millions in call options, meaning that they bet that the stock price would go up, (insinuating insider knowledge), on such tech companies as Google, Salesforce, and Micron Technology. It has also been alleged that she abused her Oath of Office by helping those companies by “slow-walking” any Congressional efforts to rein them in, such as the anti-trust measures being sought against Google, Apple and other big tech companies.
It is no surprise that Pelosi is seeking to derail H.R. 2655. During a press conference she held in mid-December Pelosi was asked if members of Congress should be banned from trading individual stocks while serving in government. Her answer was appallingly tone-deaf,
“We are a free-market economy; they should be able to participate in that.”
Her remarks about using governmental knowledge to rake in millions and her actions to stall H.R. 2655 strike me as a true “rules for thee…not for me” moment, of which she’s had many during her career. Former director of the United States Office of Government Ethics, Walter Shaub, tweeted
“It’s a ridiculous comment! She might as well have said ‘let them eat cake.’ Sure, it’s a free-market economy. But your average schmuck doesn’t get confidential briefings from government experts chock full of nonpublic information directly related to the price of stocks.”
In my opinion, elected service to our Country in any of the Branches of Government should not be a “get rich fast scam”, at the expense of the constituents they are supposed to serve. We deserve stronger legislation, such as the Insider Trading Prohibition Act, which has bipartisan support, to curtail this unethical behavior. As stated earlier, protecting and fighting for the Constituents of your home State in the U.S. Congress was an honor and a great responsibility. Hopefully the 2022 mid-term elections will promote candidates who feel the same way.