Power of information goes unchallenged in the new age as all of us are aware in today’s time how information can actually make one rich. And that is what Congress is using to exploit the average citizens in America. Some members of the Congress are minting money by using non-public information to their own stock trading interests and making personal profits on its basis.
Congress representatives in the House are trying their best to fend off the allegation, but the fact still remains that many lawmakers whom we have elected to the seats have taken up the designation of lawbreakers by using non-public information to freely trade stock without getting penalized for such derogatory actions. And this is not a new practice — it has been there for decades or rather centuries, making the taxpayers of the nation the worst affected lot. However, making big money at the taxpayer’s expense is simply unacceptable in any economy and needs to be refuted with action.
The question is that while the rest of the country is reeling under money crunch, why must non-public information be made accessible for the Congressmen only? That the Congress has not instigated any Law to hold Insider Trading illegal for Congress members makes every US tax-paying citizen ponder over why the government does not want to hold their own people guilty for actions that would otherwise catch a citizen in the wrong and get him arrested immediately? Illegal insider trading at the end can never better an economy but only elevate the capital cost for issuers of securities, thus making economic growth readings take a nosedive for sure. If it has to be accessed for making money, then it must essentially be opened for the nationwide public to better their financial stance – right?
Or is it so? Let’s assess the issue if non-public information is made available for the public, can it help to better the economy? Well, if you take a close look at it – NOT REALLY! Why? This is because, the non-public information, in essence, is some kind of information that guides the economy and helps it to make money only because it is NOT KNOWN. And if the economic worth of certain information is dependent on it being held confidential, then how can its exposure better the economy?
One of the quickest effects of non-public information being made public will be an increase in the awareness of the stock prices but this, at the same time would act unfavorably by bringing down the stock liquidity rates. An increased informative awareness of the stock market and prices can be elucidated. Thus, the price of a company share in the stock market is actually an indication of the market value plus intrinsic value of the organization.
Yes, increased availability of such information can actually better the investor’s status in estimating the safety or riskiness of the stocks that it holds. But as a natural trigger, stocks would be obtained more and liquidated less, as only stocks with good prospects will scale up the charts and held onto more while the rest will take a dip. Can such activity ever lead to the growth of the economy? No. Maybe investors would be in a position to make more money for them but ultimately it will increase capital costs of companies and bring the economy to an unprecedented halt. A certain segment of the society would have all the control over money while a certain section would crumble under pressure.
The value of the information would also not be non-public in essence and massive distribution of it would diminish its worth. For liquidity traders, this can spell doom as they buy/sell stocks only in short term in an effort to address their liquidity needs and are in no way ready to cling onto the stocks for lengthy periods of time. In short, the intelligent trading factor in the stock market would plunge to the bottom and it will also bring an end to all the speculations that keep the stock market alive and running. Is this desirable? No, rather, if this happens, newer signs of frailty can be anticipated to crop up in this already fragile economy.
Insider trading, in fact, is acting in the same line and killing the competitiveness of the economy. And given the fact that all fingers are now being pointed towards the Congress and the legal loopholes in the Federal Government system in this sphere, the public must also join hands to stop the Congress from walking all over us. If WE have voted them into office, WE must take care to see that this has stopped with immediate effect, so that the federal government gets the message to instigate a stricter supervision of the Wall Street activities as also the financial services sector of the economy. And yes, it’s time to stop the secret spending sprees of the Congress at the expense of the US taxpaying citizen.
The current law is blind to the activities of a certain segment of the Congress who have got access to the private “non-public information” accumulated via official oversights and using that for the purpose of personal benefits when trading in securities and/or commodities. In the same way, traders and lobbyists who frequent the Congress chambers are also looking for “tips” from the employees there. Such staff, thanks to their diligent service, has come to be referred to as “political intelligence consultants” and are indispensable in enriching their ever-increasing client base with this very, very confidential information.
My point is that, if this kind of “Insider Trading” is unlawful for you and me, why must the government officials be allowed to get away with it? Congress is supposed to keep a vigilant watch over Wall Street but alas….it has turned it into a goldmine for its own exclusive use! This loophole needs to be immediately shut down and the House must pull up its socks and get down to action, right now. The “Stop Trading on Congressional Knowledge Act” (H.R.682) or STOCK (introduced by Rep.Louise Slaughter) must be passed without more ado to ensure that the insider trading constraints we face must also necessarily be applied to all Congress members/staffs in addition to the federal government.
H.R. 682 is the need of the hour as it bans officials from utilizing non-public information for making personal gains. Support it to stop unethical stock trading activities of the Congress and help protect the interest of the public tax payers in US.