As for me, shares are very convenient for a certain category of the population. And also profitable.
Many believe it's time to do away with lawmakers making stock trades
131–140 of 229 posts
Re: Many believe it's time to do away with lawmakers making stock trades
#132Good luck with that.
This will be impossible to enforce. The wealthiest lawmakers will get around it, and the middle class lawmakers will be saddled with the burden of shuffling their entire investment portfolio around. It's unreasonable in practice.
(imo, everything is "insider trading" if you squint hard enough. Another losing battle.)
Impose term limits or stfu.
Re: Many believe it's time to do away with lawmakers making stock trades
#133Earlier quoted context omitted.
I think the cleanest law here is to change the law to clarify that non-public information gained by public servants and representatives that can have an affect on a stock's price should be treated as "material non-public information." Then the SEC can do their jobs like they do with other insider traders. Remember that ONLY elected congresspeople are exempt from rules like that. Other public servants are not. This is…
I'd go a step further and restrict them to index funds. Even just holding a stock could affect their judgement. So they might not trade it to their benefit, but they might make the wrong policy decision for the country.
The NPR article says "pushing a bill that would require members to divest individual stocks within six months of taking office and limit their investments to mutual funds." This new distinction (investment opportunities for members of Congress are different than investment opportunities for other Americans) creates a new conflict of interest for lawmakers who then must choose whether to invest in mutual funds instead of non-stock-related asset classes. https://www.cnbc.com/2021/09/16/democratic-plan-would-close-... suggests that the Senate may soon consider a less favorable tax treatment of the use of in-kind redemptions by mutual funds. If senators perceive that their own stock investments will be limited to mutual funds or other funds (i.e., not individual stocks), then they may have a greater incentive to vote against this tax-law change, regardless of whether the change is good public policy.
Re: Many believe it's time to do away with lawmakers making stock trades
#134It's the most blatant example of insider trading. Company insiders might have inside access to a single company. Lawmakers have access to inside information that can affect the entire industry or market. It's a perfect example of how we do have class stratification in society and that rule of law and equality are laughably distant ideas in a sea of hypocrisy.
I think the cleanest law here is to change the law to clarify that non-public information gained by public servants and representatives that can have an affect on a stock's price should be treated as "material non-public information." Then the SEC can do their jobs like they do with other insider traders. Remember that ONLY elected congresspeople are exempt from rules like that. Other public servants are not. This is…
> "This is one of the biggest signals that the US is an oligarchy and not a democracy."
The constitutional doctrine of separation of powers generally limits regulatory law enforcement by the executive against the legislative branch. This is actually a signal of constitutionally limited government-- this is a design feature.
Re: Many believe it's time to do away with lawmakers making stock trades
#135When discussing doping in sports people are generally receptive to the following argument: Athletes will do everything they can to dope because the benefits far outweighs the drawbacks. It is probable that many of the world's top athletes are doped. However, when discussing financial trading people are generally not receptive to the following argument: Stock traders will do everything they can to exploit inside infor…
> Why the discrepancy? Do people believe that successful stock traders in general are more honest and law-abiding than top athletes?
It's probably more to due with your audience than "people in general". The type of people who can/will discuss financial markets tend to be invested in financial markets, and thus do not want to understand. If you have your sense of self-worth (in more ways than one), tied up in the numbers in your brokerage account, would you readily accept the idea that your heros and "investment mentors" are cheats and liars?
How many amateur athletes would believe that professionals are all doping relative the broader population that is not so invested in sports?
Re: Many believe it's time to do away with lawmakers making stock trades
#136Earlier quoted context omitted.
> Outright banning trades will only obscure congressional trading (shell corps, friends/family, etc.) >I would prefer a public registry listing all congressional trades Wouldn't your proposal obscure congressional trading as well, because they want to preserve their alpha by not publishing their trades?
The argument can be made that insider trading isn’t actually a bad thing as long as it’s legal, precisely because allowing that information to trickle into the markets destroys alpha. Anyone who thinks hedge funds aren’t constantly trading on insider information has their head in the sand. Of course then you have problems where people with private information are incentivized to leak that information, which is bad fo…
Germany has more permissive insider trading laws, and public participation in German capital markets is much lower. Insider trading laws inspire confidence in the market for non-insiders, the average public.
Re: Many believe it's time to do away with lawmakers making stock trades
#137Earlier quoted context omitted.
Here here! I think we need to deeply reexamine how much we pay officials. Senators/Governors should probably get triple their current pay with severe penalties for any financial fraud. This was one of the better Andrew Yang points too. Reps have very little financial incentive to do the "right thing" and we could help them realign that incentive by just paying them more.
> Here here! I think we need to deeply reexamine how much we pay officials. Senators/Governors should probably get triple their current pay with severe penalties for any financial fraud. Singapore is an example of why this doesn't work. It pays the prime minister $5 million/year, in theory to prevent corruption. However he got around this by making his wife CEO of Temasek, Singapore's national investment company whic…
On the other hand, Singapore judges are well paid and their courts are considered among the most honest in the world.
Re: Many believe it's time to do away with lawmakers making stock trades
#138I have no problem with lawmakers making stock trades, but you can certainly argue that it is immediately made public. To be fair, there are probably edge conditions where a congressman has direct control over the financial realities of a publicly related company. I think the more heinous cases are lawmakers becoming lobbyists and (worse) lawmakers making huge bucks on public speaking which is a very thinly veiled bit…
Came here to say the same thing. Trades by lawmakers should be instantaneously public.
Re: Many believe it's time to do away with lawmakers making stock trades
#139Earlier quoted context omitted.
Or give lobbyists more power over the revolving cast of lawmakers who each want to cash in during their short window of opportunity.
Apologies, but I am unclear if you are facetious or serious. (not native English writer.) Can you explain what you mean?
If a lawmaker knows they'll only be in office for a limited period of time, there's potentially incentive to behave extra dishonestly to maximize how much they can profit.
Additionally, however you feel about established lawmakers, the current multi-term career lawmakers are very familiar with the process of making laws. If there's a higher proportion of new lawmakers, then the people most familiar with the process of making laws would be the lobbyists. That could result in them having a larger influence on the whole process.
The balance is that newer lawmakers are potentially less corrupted from decades in the system. It's not easy to say what the net result would be.
Re: Many believe it's time to do away with lawmakers making stock trades
#140Before the STOCK Act passed, Congress outperformed the market by 20%, with some senior Republican leaders doing as well as 35% [0,1]. Before the pandemic began in the US, 4 US Senators were picking up medical stocks after closed-door briefings. Investigations were opened by the DOJ, but they were all dropped. [0] https://www.theatlantic.com/ideas/archive/2020/03/congress-i... [1] https://onlinelibrary.wiley.com/doi/1…
Good stuff. I'd be interested in sorting that by stock to see what stocks they (including their spouses/sig-oth) all are purchasing.