Should Politicians be allowed to trade stocks?
The problems in this country seem to start and end in Washington DC. It is just amazing what they can get away with doing. There is so much conflict of interest. Of course, they put laws into effect to deal with the conflict of interest. As long as they "act" within the confines of the law, then they are not breaking the law. It is pretty convenient to write a law with many "escape routes."
Let me give you one example - if you or I were to purchase or sell stock based on information that was not privy to the public, we have committed insider trading. Insider trading occurs when an individual buys or sells securities based on information that was not public information. As a result, someone who commits insider trading has an advantage because of the non-public insider information. You can go to jail for committing insider trading.
Martha Stewart was a well-known celebrity found guilty of insider trading.
Do you think that the politicians are exposed to insider information?
Last year, members of Congress bought and sold over $355 million of stocks. LET that sink in for a moment - they bought over 355 million dollars of stocks and are exposed to insider information of some type frequently. The third most powerful politician in DC, Nancy Pelosi, bought 12 million dollars worth of securities. Do you think she knows a thing or two?
A bill called the stock act of 2012 is supposed to regulate politicians and the securities they buy and sell. However, the bill is more of an optical illusion than anything.
How about forbidding politicians from buying and selling stock? How about it being a restriction that goes along with being a politician? There are ways politicians still invest in the stock market without directing the buys and sells.
It is probably not fair to stereotype and suggest that a good portion of the $355 million was bought and sold using some type of insider information. However, it certainly isn't an optic that does not foster trust.