We’ve all wondered – how do people get elected and, within a few years, become millionaires? Joe Biden built a fortune with a bagman handling the “family business.” Others in Congress seem to do it the old fashion way: Insider trading.
Using information gleaned from insider sources has built many a fortune for Congress members. They trade on information that would have sent any private civilian to prison, but before the 2012 STOCK Act, it was common knowledge the Congress members would use information only they were privy to, to trade, buy, and sell stock. And get rich in the process.
The STOCK Act added specific statutory language that was intended to prevent insider trading.
It stated that members of Congress are “not exempt from the insider trading prohibitions arising under the securities laws…” (§4(a)). It amended the Securities Exchange Act of 1934, so that members, family and staff [would owe] “a duty” when in possession of “material, nonpublic information” obtained as a result of their public office (§4(b)(2)).
Did that “do” what the legislation intended? Maybe. But before the STOCK Act was passed, even the head enforcement official at the Securities and Exchange Commission (SEC) thought it was a toss-up if the Securities and Exchange Act of 1934 applied to the people who passed the law.
In any event, the STOCK Act was supposed to completely stop the immorality and breach of pubic trust that came with trading on insider information- and doing so with impunity. In one respect, it did staunch the ethical bleeding but Congress members still don’t fully comply. After Stock, Congress members were required to report their stock trades, but even that minor act of contrition is still violated.
Recently, at least 65 members have failed to report trades. Although the majority are Democrats, Republicans are not immune. Do they care? Not really, and why should they? The penalties are slaps on the wrist. A $200 fine, if the fine is actually enforced. Often, it is not. There are members of Congress who want to ban stock trading by members and family while members are “serving.” There is proposed legislation presently tabled that would prevent stock trading by members.
The STOCK Act is supposed to cover spouses of members of Congress too, but it seems that Nancy Pelosi’s husband has had his hand, not only in the liquor cabinet, but potentially gathering information while pillow talking with someone named Nancy.
Paul bought $5 million in stock options (20,000) in Nvidia – a computer-chip company that makes chips used in advanced computer gaming. This was (just by coincidence) ahead of a vote next week in Congress that will provide $52 billion in subsidies to the domestic semi-conductor sector. The trade could (and likely will) yield a substantial windfall for Paul. After all, Mediterranean vacations at private villas don’t pay for themselves. Paul made the purchase three days before he crashed his Porsche into a truck and was subsequently charged with a DUI. Maybe Paul was out celebrating his upcoming big payday with his female mystery “passenger.” I have insider information that she was not named Nancy.
Rules for thee, but not for me.