The Stop Trading On Congressional Knowledge, or Stock act was signed into law yesterday April 4th, 2012 by President Obama, prohibiting members of congress from buying and selling stock based upon inside information. It is about time that this was passed, given the 6 years the bill has been worked on and the opportunity for corruption it created for decades. The bill definitely stalled, but was recently given new life when 60 minutes featured it.
The law preventing everyone from investing based upon inside information has existed for decades, but congressman strangely were conveniently exempt from the law. This was political hypocrisy at the highest level, when members of congress had exempted themselves from law that effected everyone else, just so that it would provide them the opportunity to obtain wealth.
Before this law many congressman and women became millionaires trading on information that only they and few others had knowledge of, sometimes because of private committees that they were a part of. Some of these congressman and women probably crafted law and based their votes on the law knowing that it would provide them the opportunity to profit directly in their own investment portfolios. The corruption went further, when you consider there have been reports that some of the inside information was leaked to hedge funds. Many hedge fund’s investment minimums are so large that only the wealthy can invest in them. These are examples of congressman, their hedge fund friends and clients, and businesses that benefited, colluding using their political power to become wealthy or to add to their wealth. The gulf between the rich and the poor has expanded in recent years, is it any wonder that it has when you consider the special advantages afforded to a select few. Hopefully this is not the end of the story, I would love to see a reporter with courage to dig into the corruption further to trace who benefited from insider trading; the truth would be embarrassing to both political parties.
