Change in Insider Trading Law Protects Politicians, Not You

Monday, 22 Apr 2013 07:38 AM

By Denis Kleinfeld

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When was the last time you heard of anyone inside of the Washington, D.C., beltway being convicted of insider trading?

With Congress passing a modification of the Stop Trading on Congressional Knowledge (STOCK) Act of 2012 on April 15, it is likely you will not be hearing any of that sort of news in the future.

Insider trading is a big deal to the government. After all, it’s important that the Beltway maintain the charade that the financial markets are regulated with integrity in order to maintain a level playing field and fair functioning of the capital markets.

Over the last three years, the Securities and Exchange Commission (SEC) brought 168 insider trading actions, with 58 being in 2012. The SEC reported that these involved over 400 individuals and entities, including financial professionals, hedge fund managers, corporate insiders and attorneys.

The SEC is serious about this stuff.

After all, Martha Stewart, a billionaire, got jail time for an alleged $50,000 item.

However, there does not appear to be any case in the last three years, or, it seems, in the entire history of the SEC, that anybody inside the Beltway getting a government paycheck has ever been convicted of insider trading or related charges of obstructing justice.

This is comforting proof that the American people are fortunate to be the only country in the world whose political leadership and government employees do not lie, cheat or steal even when opportunity is all around them.

Nobody inside the Beltway cheats on their taxes or gets involved in illegal drugs and they certainly don’t trade on inside financial information.

Rumors, of course, have abounded for years about those in Congress and the various administrations making money — a lot of money — from passing on not-yet public information to family, campaign contributors and vote bundlers.

The rumors became a bit more real when Steve Kroft of the television show “60 Minutes” broke open the story that insider trading wasn’t illegal for members of Congress.

The furor from that program reverberated all over the United States, resulting in Congress quickly passing the STOCK Act.

Presumably, the title reflects an acknowledgment that Congress does, in fact, trade on insider information.

In the House, the vote was 417-2 (14 having disappeared), and in the Senate, it was 96-3 (with 1 MIA).

Promptly Sen. Grassley, R-Iowa, denounced the whole thing as being watered down.
“The lobbyists get rich. Wall Street traders get rich. But the American people lose,” he said.

I guess Grassley has gotten religion since then.

On April 15, Congress showed their true colors once again by passing an amendment to the STOCK Act making nearly impossible any sort of verification that Congress or anyone else in the government is following the insider trading law and rules.

This time it was reportedly by unanimous voice vote. It took 10 seconds in the Senate and 14 seconds in the House.

Just another example of the politicians being protected and you’re not.

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