Just require them to announce their trades publicly 24 hours in advance. And let them manage their own finances. All these shenanigan's would disappear.
Also as a regular fintech worker, I have to get internal approval from my employer for anything I do. Why can government representatives trade willy nilly without any oversight?
When I was in that situation, I had to disclose all brokerage accounts to my employer, and authorise the brokers to send copies of the account statements to the employer's compliance department.
20 years ago it used to be the honor system. Now all the records are connected, many make it a requirement of employment to move all accounts into the firm.
Also, it's mandated by the SEC. There are obligations on you, your employer, and (if your broker is in the US) your broker to ask you, and to inform each other.
So it's kind of on the honour system - your broker probably won't ask you for payslips proving you don't work in the industry - but a lot of people are incentivized not to let it happen.
That's true too! Finance sites like Marketwatch and Yahoo have insider transaction logs for each company when you search their ticker symbol [1]. There should be a tab to view "US office holder and their immediate relatives" transaction log page as well listed for each ticker.
Not being specific enough made my comment misleading.
"The amendment also eliminated the requirement for the creation of searchable, sortable database of information in reports, and the requirement that reports be done in electronic format, rather than on paper."
Why not just prohibit members of Congress of owning stock? They are some of the most powerful people in the world. Why is it so much to ask that a Senator or especially Representative serving in the most powerful legislative body in the world just take a cash position for 2-6 years?
I fully agree, and I'd like to extend it to their families as well. But... you ask "why not" and the simple reason is that only they could enact such a law. And even when the laws are in place -- Trump ran roughshod over the foreign emoluments clause, and there were zero consequences. Why would the richest and most powerful Democrats set such a precedent, only to have it turned around when they're in power and stand to profit?
Are you advocating that if a relative of mine runs for office and is elected (whether I supported their candidacy or not), I should be prohibited from owning stock?
It could work the other way around, ie if your close relations have stock that may affect your governing decisions and they refuse to commit to re-investing more generally in the event of your election, then you are prohibited from running for office.
Obviously there would be complications, but are you advocating society shouldn't strive to clearly separate governance of the public from private, conflicting pecuniary interests? I can't tell if you're dismissing the problem or saying there's a better solution ...
I'm mostly thinking of spouses, parents and children, and I think that a blind trust should probably suffice (you could own stock, just not have direct control over it).
Yes - it definitely seems like it should be more or a "let's hope we can see both" type thing rather than an "either or type" thing. I think publicizing existing holdings is huge in that it can be done based on existing data sets as unusualwhale has shown and it is something that "we the people" can do, today - perhaps just by sharing this article.
Eradicating politicians doing insider trading is a much longer slog that we are mostly just hoping "those with the power" will enact against their own self interests.
Because investments are still a great way to hold your savings. The problem here isn't that they have investments (e.g. a 401k), it is that they are acting on insider information. Which is illegal to everyone else. At _minimum_ they should be held to the same standards. Though I think most people agree that they should be held to _higher_ standards, which gives suggestions like a blind trust. And obviously strict rules of if they break the blind part that they get jail time.
It’s not insider information. You might consider it material non-public information, which you can’t trade on in Europe, but in the US insider trading has a much more narrow definition: roughly it has to come from the insiders of the company. If your friend at Microsoft tells you that they won some massive contract, you can’t trade on it. If you overhear that news in a café, you can. If your friend at the government tells you they’re going to agree on a big contract with Microsoft, I don’t know if you’d be allowed or not but if you weren’t allowed I don’t think it would be insider trading.
Anyway, that obviously isn’t legal advice. And I agree that people should expect legislators to act with high integrity, but that’s not really how they vote.
Thanks! I actually appreciate the nuanced correction. I used insider trading as the term not specifically because the information was non-public but that it feels like they have inside knowledge since they are able to directly affect the markets. Maybe there is a better term for this? I don't think this still falls under what you said.
Again, they are serving in the most powerful legislative body on earth. Putting retirement savings on hold is an extraordinarily small request given the amount of power that even the lowest-ranking Senator yields.
I oppose this idea simply because most people’s’ retirement is held in investments now; I even think that congressional pensions have been dialed way back IIRC. I much prefer the “notify publicly well in advance” approach.
> Why is it so much to ask that a Senator or especially Representative serving in the most powerful legislative body in the world just take a cash position for 2-6 years?
I agree in principle, but a lot of these people literally serve until they drop dead, which is a different problem with congress. Might be a bit much to tell someone not to invest for 40+ years.
I am not at all opposed to this strategy either, but as you seem to imply, it would really need to be hardened against other corruption and schemes like that the blind trust has to be run by the same government office.
It is why I like the fact that they just have to announce their stock trades ahead of time, it still allows them autonomy, but also there is no sense in front running them if they are not trading on insider knowledge. Their performance should essentially be in line with the market, not like Mr. Gottheimer that seems to have tripled his net worth in FY2020.
I think it would be perfectly fine to let them have their money in broad index fund, or maybe an actively managed fund which should also be open to every citizen. Allow withdrawals etc. only once a month or so to avoid market timing.
That is bad policy. There is a segment of middle/upper class Americans who own stock; anyone with a retirement plan that funds it. Forcing middle/upper class legislatures into a cash position instead of stocks would make them less, not more connected to similarly placed people. If they can't own stock does that mean they'll just instead invest in real estate which can be even more conflicted?
Of course, if they held widely diversified Index funds there would be fewer conflicts - but not zero as evidenced by legislators trading around COVID briefings.
I think they're too aware that with real dollar inflation probably running at least 10% per year (per Michael Saylor), they'd loose too much value for them to consent to holding only cash for 2 to 6 years. For every $100K they had, they'd end up holding something near $81K down to $53K in real purchasing power... and that's assuming they were content to only stay in power one term.
that's exactly the point. it's almost a game for rich people to pump up their legacies or because they're just bored. you want them gone. When they are gone, there will be plenty of people left that choose never to buy another stock again for the rest of their lives. No law, just a personal code. Because the influence and power obviously last after you leave office. Monks and samurai can exist. Then so can a congressional Bushido. You just have to stop voting for people who think about their stocks all day while sitting at meetings.
Yes - in addition - just have documentation sites like unusual whales which track the trades, holdings and profits of politicians - create infographics prior to every election and distribute them to existing voter information/polling prediction sites like real clear politics.
Politicians already long on certain stocks can also profit from legislation that they are passing. Being privy to insider info which leads to continuing to stay long a stock is an advantage that wouldn't be detected by just sharing recent trades.
In addition to trying to eradicate insider trading - just shedding light on existing holdings by US office holders will have a huge cleansing effect that will go a long way to showing potential biases/conflicts of interest.
I would love to believe that would make a difference, but in a hyperpartisan world where many vote based on a handful of ideological allegiances, how many would seriously be moved to change sides over something as small as a little corruption? Or is this something that would be more at the primary level, where it really is more about personality and personal qualities than party?
In any case, the Trump movement's whole response to this kind of thing was a combination of denial and "lol everyone does it", and it seems like that was enough for many in that camp.
There are still voters on the fence / differences in voter turn-out that mean politicians worry about scandal. The main effect is that these politicians will probably be replaced by different ones from the same party. Moreover, other politicians, hoping not to be replaced, might stop doing blatant insider trading.
Or is this something that would be more at the primary level, where it really is more about personality and personal qualities than party?
>> For sure there are many factors that influence someone's vote. I think you're right - its more likely to cause leadership rotation within the parties where the rest of the factors are more similar (i.e. stance on gun rights, etc.). The challenge today is that incumbent politicians within their own party tend to have great name recognition among voters - but are more likely to be in the pockets of corporations. This would enable challengers within the party to potentially have an issue they can highlight.
"lol everyone does it"
>> And perhaps articles prove in a data science-y way that perhaps this is true - many politicians are doing it.
Or perhaps better yet, simply make all trades public in real-time.
Trades could be scrutinized for insider trading by both the SEC and independent traders/firms, just as there are independent services scrutinizing the crypto blockchains.
Insider trading could then even plausibly be legalized by eliminating the advantage of insider trading (it'd have to be based on a lot of study of the data). If we (or other funds) can setup triggers to act on the trades of insiders as soon as they hit the wire, the market will move against them, and we can also share arguably the same advantage by doing so.
That doesn't work. If they are aware of a huge non-public deal, the market may react based on their trade, but not nearly as much as when the deal goes public.
It would help. There are already funds that track the money of politicians and invest accordingly. If they submitted a large options trade, the funds would front run them and take away much of the profit.
