{"id":4882,"date":"2022-10-12T09:00:24","date_gmt":"2022-10-12T14:00:24","guid":{"rendered":"https:\/\/blogs.luc.edu\/compliance\/?p=4882"},"modified":"2022-10-12T09:00:24","modified_gmt":"2022-10-12T14:00:24","slug":"our-american-government-a-self-serving-entity","status":"publish","type":"post","link":"https:\/\/blogs.luc.edu\/compliance\/?p=4882","title":{"rendered":"Our American Government: a Self-Serving Entity?"},"content":{"rendered":"

Jake Parentis<\/em><\/span><\/p>\n

Associate Editor<\/em><\/span><\/p>\n

Loyola University Chicago School of Law, JD 2024<\/em><\/span><\/p>\n

As of September 2022, the current Congress has an approval rating<\/a> of just 17% \u2013 an ignominious reality \u2013 and a series of recent investigations won\u2019t serve to ease the mounting public frustration. Insider<\/a> recently identified at least 72 members of Congress in noncompliance with the Stop Trading on Congressional Knowledge Act (STOCK)<\/a>. This revelation \u2013 among others \u2013 has prompted a push for the enactment of more stringent congressional stockholding limitations.<\/span><\/p>\n

<\/span><\/p>\n

Corruption & compliance unveiled<\/strong><\/span><\/p>\n

\u00a0<\/strong>As stated by President Obama\u2019s Office of the Press Secretary<\/a>, the federal STOCK Act was enacted in 2012 to prevent members of Congress from trading stocks based on nonpublic information they gleaned on Capitol Hill. STOCK was designed in response to several investigations\u2013 such as a November 2011 60 Minutes report<\/a> \u2013 suggesting that several members of Congress engaged in extensive stock trading after learning classified details regarding the financial crisis of 2008. STOCK requires members of Congress to publicly and promptly \u2013 within 45 days \u2013 disclose any stock trade made by themselves, a spouse, or a dependent child, whenever a trade is valued at $1000 or more. This requirement was one amongst several others outlined in the Act meant to combat insider trading and to encourage lawmaker transparency in regard to their personal financial dealings. Insider recently identified 72 lawmakers who violated the STOCK Act by making disclosures late, inaccurately, or not at all<\/a>.<\/span><\/p>\n

Among these culprits are Sen. Dianne Feinstein (D-CA), who was months late disclosing a five-figure investment her husband transformed into a private, youth-focused polling company, and Sen. Rand Paul (R-KY), who was 16 months late in disclosing that his wife bought stock in a biopharmaceutical company that manufactures an antiviral COVID-19 treatment, as reported by the Washington Post<\/a>. Many accused members of Congress blame oversights, clerical errors, and inattentive accountants<\/a> for their STOCK noncompliance. Some lawmakers claim that trades were executed without their knowledge, yet the nature of such claims can be difficult to substantiate. Lawmakers who violate the STOCK Act face a notably insignificant fine of $200. That fine is often waived by House or Senate ethics officials.<\/span><\/p>\n

To make matters worse, the New York Times<\/a> conducted an investigation using the comprehensive database Capitol Trades<\/a>, which compiles all congressional trading disclosures. The Times matched these trades against committee assignments, hearings, and investigations to track how personal, congressional financial transactions might interact with the lawmakers\u2019 political work. The study revealed 3,700 potentially conflicting trades<\/a>, which amounted to nearly 10 percent<\/a> of all transactions by members of Congress from 2019\u20132022. The test also revealed that during that three-year span, of the 183 current senators or representatives who reported a trade of a stock or another financial asset by themselves or immediate family members, \u201cmore than half of them sat on congressional committees that potentially gave them insight into the companies whose shares they reported buying or selling.\u201d It is also worth noting that this investigation is non-exhaustive, excluding various cases of suspected corruption, such as the alleged insider trading scandal<\/a> carried out by the husband of House Speaker Nancy Pelosi, because Pelosi does not sit in on committees. Thus, this reality suggests the existence of ample corruption beyond the scope of the investigations already conducted.<\/span><\/p>\n

Congressional calls to action \u2013 all bark, no bite?<\/strong><\/span><\/p>\n

Both prominent Democrats and Republicans have come forward to suggest plans to limit or even outright bank stock trading. In January 2021, Rep. Chip Roy (R-TX) and Rep. Abigail Spanberger (D-VA) introduced the Trust in Congress Act (TRUST)<\/a>, which would require members of Congress, along with their spouses and dependent children, to put relevant investments in a qualified blind trust during their entire congressional tenure. Spanberger commented<\/a> that the bill would ensure lawmakers \u201ccannot use their positions . . . to unethically inform investment decisions or influence the value of their existing investments.\u201d In January 2022, Senators Mark Kelly (D-GA) and Jon Ossoff (D-GA) introduced a similar bill<\/a>, and as of September 2022, several other similar proposals<\/a> \u2013 and notably mostly bipartisan \u2013 are floating around Congress. In April of 2022, Sen. Elizabeth Warren (D-MA) even suggested an outright ban on congressional stock trading at a federal hearing on insider trading<\/a>.<\/span><\/p>\n

Most recently, on September 22, House Democratic leadership released a framework<\/a> for congressional stockholding limitations. That same day, Rep. Hakeem Jeffries (D-NY) announced that the chamber may consider legislation to reform the STOCK Act as soon as the subsequent week. The framework calls for increasing the penalties for violating the STOCK Act from $200 to $1,000 for every 30-day period<\/a> in which a member of Congress is not in compliance, and calls for greater transparency surrounding enforcement of the law. The framework additionally calls for mandating electronic filing of financial disclosures and prohibiting Supreme Court Justices from trading stocks.<\/span><\/p>\n

Despite such announcements, several prominent proponents of a stock trading ban have reported<\/a> they\u2019ve been largely excluded from the Democrat leadership\u2019s legislative plans. While Rep. Raja Krishnamoorthi (D-IL) has expressed \u201cconcern about the lack of detail,\u201d as the clock \u201c[winds] down pretty fast,\u201d Rep. Pramila Jayapal (D-WA) has also made it clear that she has \u201cnot exactly heard what\u2019s happening,\u201d and \u201ccan\u2019t say [she\u2019s] confident.\u201d The \u201cirony\u201d of these seemingly disjointed efforts has not been lost on Spanberger, who claims she\u2019s been \u201cghosted by Democratic leadership,\u201d noting the \u201ccomical\u201d aspect of these disorganized efforts, despite goals of governance reform to promote \u201cgreater transparency in the system.\u201d Meanwhile, Sen. Jeff Merkley (D-OR) reported to Insider<\/a> that the Senate version of a stock trading ban is unlikely to come until after the midterm elections in November.<\/span><\/p>\n

The public majority demands and deserves immediate change. A January Fox News poll<\/a> revealed broad, national bipartisan support, finding 70 percent of Trump and Biden voters \u2013 in nearly equal numbers \u2013 favoring a ban restricting current members of Congress and their immediate family from trading stocks. It remains to be seen how the federal government will proceed.<\/span><\/p>\n

Your move, Congress.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

As of September 2022, the current Congress has an approval rating of just 17% \u2013 an ignominious reality \u2013 and a series of recent investigations won\u2019t serve to ease the mounting public frustration. Insider recently identified at least 72 members of Congress in noncompliance with the Stop Trading on Congressional Knowledge Act (STOCK). This revelation \u2013 among others \u2013 has prompted a push for the enactment of more stringent congressional stockholding limitations.<\/p>\n","protected":false},"author":155,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[26,29],"tags":[],"class_list":["post-4882","post","type-post","status-publish","format-standard","hentry","category-finance-banking","category-fraud-abuse"],"_links":{"self":[{"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=\/wp\/v2\/posts\/4882","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=\/wp\/v2\/users\/155"}],"replies":[{"embeddable":true,"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=4882"}],"version-history":[{"count":0,"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=\/wp\/v2\/posts\/4882\/revisions"}],"wp:attachment":[{"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=4882"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=4882"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=4882"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}