Here is Where Accountability has gone to, in the USA
Wish you had say, $1.00 for every time you heard, “How does a man or a woman making $100 grand a year and after leaving the U.S.Congress is worth mega-millions?” Here is a little article I found for you and me to see what has happened to accountability in this country.
Imagine that you are an elected member of the United States House of Representatives in the middle of the debate on the health-care reform act that was passed in 2010. In a House committee meeting, you learn before anyone else that a proposed public insurance option – a program that would compete with private insurance – will not be included. This information will have a large impact on health-care companies’ stock prices. Can you trade these companies’ shares before it is made public?
Morally, it is difficult to separate this example from traditional cases of corporate insider trading. Yet no law prohibits the practice. The U.S. Congress – the legislative branch of the country’s government – effectively exempts itself from the normal rules of insider trading. Congress and the U.S. Supreme Court are the only federal agencies whose employees may, without restrictions, trade stocks based on non-public information. All other U.S. government employees who traded on privileged information of the type described above would be acting illegally.
Not only can members of Congress legally trade on confidential information; they do, despite the potential cost to their reputations. The U.S. television program 60 Minutes recently reported that several current members of Congress allegedly used confidential information that they acquired on the job for personal gain. While the nexus between the privileged information and the trading is difficult to prove (as it is in most insider trading cases), the timing is highly suspicious.
But it is difficult to challenge this congressional “privilege” in the U.S., in part because insider trading is an ambiguous concept under U.S. law, with no statutory definitions of the terms “insider,” “inside information,” or “insider trading.”
In contrast, the European Union has tried to define these terms in directives aimed at prohibiting the practice. According to a directive issued in 1989, “An insider is one who, due to his relationship with the company as manager, director, employee, or major shareholder, possesses inside information (material non-public facts) and knowingly uses such inside information to acquire or dispose of securities to which the information relates for his own account or another.”
Even more worrying than insider trading by elected representatives is the political-intelligence industry that now flourishes in Washington, Brussels, and other major global capitals. In the U.S., former U.S. congressmen and their staffers collect privileged information and sell it to hedge-fund managers, raking in $100 million annually.
A proposal to ban insider trading by U.S. congressmen has languished in Congress since 2006. But it appears that the 60 Minutes program generated some attention; within four days of the broadcast, the number of cosponsors of the proposal increased from nine to 57, and a session was called to discuss the legislation next month.
Yet the problem is not simply Congress’s exemption from insider-trading law. The real issue is that the U.S. Congress – like many countries’ legislatures – lives by rules that are very different from those imposed on ordinary citizens. In particular, the accounting, transparency, and fraud rules that govern businesses do not apply to elected representatives.
Rather than just extending insider-trading law to the U.S. Congress (or to other legislatures), citizens should demand that all restrictions and reporting requirements imposed on the private sector apply automatically to elected representatives as well. This would make these legislatures more credible, and their laws more just.