Monday, October 14, 2013
Are Politicians Profiting Off Of the Market Volatility They’re Creating
When I got home from grocery shopping, I checked to see how the stock market closed. It closed up today. The consensus is that the market closed up due to speculation that a debt-deal was eminent. Lately every day is different. One day it’s down due to a lack of an agreement. The next it’s up due to the speculation of an agreement. This made me wonder if our politicians are investing long and short contingent on the sentiment they share with the media.
60 Minutes did a story in 2011 on high-level government officials profiting from insider trading, making government deals and investing accordingly before the information was public. This got Washington up in arms and they finally decided to pass the “Stop Trading on Congressional Knowledge” Act or the “STOCK” Act. You know someone gets paid a lot of money to come up with acronyms in Washington? That’s an “essential” job, of course.
Congress passed the bill and everyone patted themselves on the back. That was, until, they realized enforcing it was going to be hard. So, on the DL (down-low), Congress, both Democrats and Republicans, quickly passed an amendment on April 12 and 13, 2012, gutting key provisions of the act and President Obama signed it into law the following week.
Essentially the amendment to the STOCK Act removed requirements to create a searchable database listing disclosures of high-level officials and file their disclosures electronically. This makes oversight virtually impossible. Yes, insider trading is still illegal, but without critical oversight, who knows who’s profiting off the rollercoaster we’ve been riding. Insider trading was illegal prior to 2011 and clearly the oversight and adherence to the law was questionable.
This makes us wonder if politicians are profiting off of the market volatility they’re creating with the government shutdown and debt deal negotiations.