How do you feel about stock trading by U.S. Representatives and Senators? In 2021, federal lawmakers made an estimated total of $355 million worth of stock trades. Insider trading was outlawed decades ago, but aren’t members of Congress the ultimate insiders?
As a financial planner for over 30 years, I am keenly aware that our trading markets must be transparent, and fairness dictates that no corporate executive or lawmaker with non-public information should be allowed to financially benefit from that information to the detriment of other market participants.
In 2021 the husband of Speaker Nancy Pelosi purchased $2 million worth of Microsoft shares two weeks before Microsoft won a $22 billion contract to deliver high-tech headsets to the U.S. Army. The Stock Act of 2012 which was intended to prevent politicians from profiting from non-public information has turned out to be toothless, especially after establishment politicians from both parties united to weaken the law in 2013.
Bipartisan legislation has recently been introduced to tighten up the rules and ban active stock trading by members of Congress. We need to allow our lawmakers to participate in the wealth building process of our capital markets through blind trusts managed by professional advisors, but it’s high time that the temptation and potential corruption from buying and selling individual stocks is eliminated.