United States Congressmen are, financially, in the top 1%. Not only do they make a base salary of $174,000, but they rake in millions (if not more) from campaign donations. While this sounds like an ample amount of money, many Senators and Representatives find it necessary to (allegedly) engage in insider trading activities, profiting off of confidential information that is supposed to help them make legislative decisions, not facilitate a side-hustle.
Insider trading is generally defined as the trading of stocks or other securities related to a public company based on information that is not available to the public. Usually, this term refers to the actions of a corporate executive, but members of the Senate and the House of Representatives are also poised to engage in this (illegal) practice.
First, they decide which laws are in effect on different companies, leading to an obvious opportunity of making money. Secondly, and maybe even more importantly, Congress Committees are sub-legislative groups of elected officials that are put together to address specific issues, such as the environment or technology. As a result, they receive briefings from representatives in those industries, non-public information, but that doesn’t dissuade them from trading on it.
While it may sound like there isn’t anything to hold these politicians back, legislation introduced in the Obama administration sought to limit insider trading in congress. The Stop Trading on Congressional Knowledge, or STOCK Act, prohibits the use of non-public information for the personal gain of members of congress and other related jobs. However, while STOCK has very high aspirations, it falls completely short when trying to achieve them; this is mainly because the act has yet to be enforced even though there have been clear violations of its terms.
Furthermore, even if it were to be enforced, the only repercussions for the senators is a $200 fine, an amount so paltry it’d be a stretch even to call it a slap on the wrist. While some politicians want to ban all stock trading for these public officials, others, such as Speaker of the House Nancy Pelosi, think that “it’s a free market and they should be able to participate in it”.
All in all, US Senators and Representatives gain non-public information through their responsibility to come up with legislation on a wide range of topics and then use that information to unethically make millions on top of their already large salaries and campaign contributions. On top of this, we rely on the very ones committing insider trading to limit their opportunities, which sounds increasingly unrealistic as more and more politicians’ insider trading comes to light.
