Lawmakers and Insider Trading!

This is a serious matter that I too feel must be addressed. The emphasis here is CONFLICT OF INTEREST. Remember the Securities Exchange Commission (SEC) nailing Martha Stewart to the wall back in 2004 for ImClone insider trading click here to read the full story. Well, what about these folks in Washington who are privy to every kind of information related to every corporation in every industry. I have taken the following article from The Center for Responsive Politics website.

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OpenSecrets.org

Lawmakers and Insider Trading

Published by Eliza Krigman

October 17, 2008 3:19 PM

Should insider trading by members of Congress be illegal? ProCon.org, a nonpartisan site for examining all sides of issues, is addressing this sticky question, and they have used data from the Center for Responsive Politics on the richest lawmakers to help sort out the answer. According to ProCon, 45 corporations, spanning finance, insurance, oil, pharmaceutical, telecom and other industries, made the 10 richest senators' top five stocks owned, purchased and sold lists in 2007. Many of these lawmakers hold positions on committees that have influence over the financial success of the companies they are invested in.

The crux of the issue is whether lawmakers' ability to craft legislation that can directly affect corporations' stocks puts them in the path of privileged information, which might qualify their decisions about their own investments in these companies as illegal insider trading.

Insider trading, a term associated with illicit stock market transactions, does not always refer to an illegal activity. Insider trading can refer to corporate insiders-officers, directors and employees-buying and selling stock in their own companies, which must be reported to the Securities and Exchange Commission. In and of itself, it is not illegal. However, it becomes illegal when corporate insiders or outsiders make stock market transactions with knowledge of material nonpublic information about corporate activity. The SEC website lists government employees who learn of such information because of their employment by the government as an example of illegal insider trading.

Given the difficulty of determining what constitutes "material nonpublic information," whether lawmakers should be restricted from insider trading does not have an easy answer. "Americans' elected representatives in Congress should be invested first and foremost in the public's interest," Sheila Krumholz, executive director of CRP says on ProCon.org. "Public disclosure of lawmakers' personal finances is designed to keep them focused on the job they were sent to Washington to do, and to discourage politicians from undercutting the public's trust in government by trading on inside information to enrich themselves."