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It’s your move, America: Create change

Independent Investor

It is no accident that a growing number of senators and congressmen are supporting an end to insider trading among Washington lawmakers. Given the dismal approval ratings of the nation’s politicians, anything that can raise ratings is at least being considered. But don’t count on the passage of this bill called STOCK (Stop Trading on Congressional Knowledge), which is scheduled for a vote in the next few weeks.

In a column that ran in The Lakeville Journal last month (“Gordon Gekko should run,” Nov. 17), I pointed out that our nation’s elected officials were not subject to the insider trading law that regulated everyone else. As a result, individual politicians and their cronies have profited substantially year after year from the knowledge they picked up in closed door hearings, subcommittees and the like.

This access to insider information has become even more important over the last few years as more and more market-moving events are triggered by governmental actions. Just consider how government pronouncements in the United States and Europe over the last six months have caused huge market swings.

Efforts to change this law have been going on for years with scant success. News stories such as the Wall Street Journal articles on the subject last year and last month’s “60 Minutes” report on the scandal have increased public awareness. I suspect that if their approval ratings were not so low (Congress has a historically low 9 percent approval rating) the politicians would simply ignore the heat, as they have done in the past, and continue to profit at taxpayers’ expense.

A month ago, only nine congressmen supported the bill that would require elected officials to report all trades over $1,000 within 90 days. After the “60 Minutes” show, that number increased to 180, and more than 20 senators have since jumped on the band wagon.

Today, a cozy relationship exists between politicians, political intelligence firms and big players on Wall Street. There is nothing illegal in a congressman or senator divulging sensitive information to a political intelligence firm which in turn sells that information to Wall Street. The more market-sensitive information that is passed on through the pipeline, the more a particular politician can demand in future campaign contributions from the beneficiaries of that information.

This bill would make it illegal for individuals and political intelligence firms to continue that practice. It would also require firms and individuals involved in political intelligence to register just like any other federal lobbyist.

Call me a cynic, but I doubt this bill will pass. Not only is lawmakers’ potential for using their office for personal gain at stake, but this bill will also jeopardize the pipeline to campaign funds from those special interests we hear so much about.

In a different world, all my readers and everyone in America who cares (the 99 percent), will call or email their representatives in Washington and demand he or she vote for this bill when and if it comes up for a vote. It is your chance to change a lot of what is wrong with Wall Street right now. It’s your move, America.

Bill Schmick lives in Hillsdale, N.Y. He is registered as an investment advisor representative with Berkshire Money Management. Bill’s forecasts and opinions are purely his own. None of the information presented here should be construed as an endorsement of BMM or a solicitation to become a client of BMM. Direct inquires to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com.