While the nation continues to grapple with life under the coronavirus, recent insights show that members of Congress have profited from this disaster. Indeed, already four Senators have been implicated in an insider trading scandal, selling million dollars’ worth of stocks after they were briefed about the impending Coronavirus outbreak.
Yet this isn’t the only example of insider trading, as multiple times are members of Congress accused of insider trading. Indeed, as this pandemic shows, perhaps members should be barred from owning stock as it often leads to a conflict of interest.
Despite the Supreme Court outlawing insider trading in 1909, it was only in 2012 when Congress passed the ‘Stop Trading on Congressional Knowledge’ (STOCK) Act, which for the first time explicitly forbade Congressmen from doing so. A much-needed change, as research found that before the STOCK Act was passed, Congressmen could actually beat the market by 6 percent, better than any Wall Street analyst.
Yet, despite Congress’s best attempts to curb this activity, owning stocks continue to remain a problem. In 2019, Representative Chris Collins (NY) was sentenced to jail after he admitted he participated in insider trading. And in 2018, Senator James Inhofe (OK) (one of the recently accused Senators) bought stocks in Raytheon after attending a similar briefing where he learned the stock would dramatically increase in value.
In fact, with over half of Congressmen owning stocks, the problem has shown to be a more pervasive issue than simply buying and selling stocks. For instance, it was reported that as more Congressmen owned Apple stock, lobbying from the tech firm also decreased, as if to say, owning stock in the company was influential enough.
Which brings us back to the current scandal on hand. Just weeks before the general public knew the full impacts the Coronavirus would have on the nation, U.S. Senators were briefed on the seriousness of the matter. Shortly thereafter, four Senators sold a combination of around $6-10 million dollars’ worth of stocks.
While an investigation is already underway on one of the alleged Senators, Richard Burr, this scandal only continues to show the fundamental problem of Congressmen owning stocks. How can the public be fully convinced that their representatives are unbiased and are voting in the interest of their constituents? They can’t.
How are Congressmen supposed to vote without being directly or indirectly influenced by the performance of their stocks? It seems impossible when millions of dollars are on the line.
To ensure that this illegal activity is put to an end, the best solution would be to restrict Congressmen’s ownership of stocks. Currently, Congressmen can freely trade their stocks, yet legislation that would forbid stock ownership, like the one that was introduced in 2018, would remove the temptation altogether.
Another option would be to ensure that Congressmen’s stocks be put on “freeze,” which would stop all trading during their term of the office. That way there is no question in anyone’s mind whether a massive selloff was coincidental or insider trading. Finally, a third solution would be to transfer their stocks to a blind trust account, which would be managed by a third party (to avoid anyone from indirectly influencing it).
As the nation currently grapples with COVID-19, an unneeded burden has landed in the laps of the American public. For the time being, four Senators are accused of illegally gaining from a pandemic. While these insider trading claims may or may not be true, one thing is for sure, these Senators wouldn’t be in this mess had they not been able to control their stocks.
Congressmen owning stocks has always been a problem. Once again, under the current pandemic, does it show that Congressmen spend too much on their portfolios when instead they should worry about the people they represent.