Private Ownership of Stock By Public Figures

 Material wealth, the one thing most of us strive for.  The accumulation of capital according to some is the epitome of existence in this capitalistic society we live in.  I would be lying to you if I said that money wasn’t a motivating factor in why I do the things I do.  The money I made off of COVID made me wish I injected more money into the market when I did.  The rise and fall of stocks are hard to predict by the laymen, but when you get it right,it leads to large gains at the expense of only time.  So what happens when public figures are allowed to trade stocks?  Some may find it morally apprehensible, while others study their moves, replicate, and repeat, hoping to beat the system.  Here is my story of Private Ownership of Stock By Public Figures.

As of right now, there are no laws preventing publicly elected figures from owning stock.  Whether the concept is justifiable, we must understand the concept of private ownership.  Private ownership in capitalism is the idea that land, machine, and capital can be owned by private individuals, including public figures.  Our Constitution allows anyone, including publicly elected officials, to own private ownership which includes stocks.  The problem is that Congress rights its own rules, its own ethics, and such rules are very broad and undeveloped. 

So one may ask, what has Congress done, what legislation has been passed in terms of stock options being purchased by publicly elected officials.  In 2012, Congress passed the Stock Act of 2012.(Stop Trading on Congressional Knowledge Act)  This piece of Congressional legislation requires members of Congress, their spouses, and their children to publicly disclose most stock trades worth more than $1,000 within 45 days.  Although this provides citizens with transparency with knowledge of what our elected officials are doing, it doesn’t provide enough detail of why they made the trade(s) they did.  Law makers legally cannot make trades on material, non-public information gained through their duties in Committees, but the penalties are few and far between.  Federal law( 18 S.C. 208), prohibits members of Congress from acting on matters in which they have a direct financial interest, but definitions of such laws are very vague, and so it leaves much to be said about the concept of financial self-interest and federal law.  

So why is it a problem for publicly elected officials to hold stock in publicly traded companies?  First and foremost, members of the government hold first hand knowledge of government appropriations(spending), regulations, hearings, or federal contracts that can affect stock prices.  As a result, they can act on such knowledge for their own private gain.  Knowledge of such trades within 45 days is simply not enough for the American people when private knowledge is made for personal gain.  Disclosure rules don’t prevent timely or strategic trades that might appear self-serving.  Enforcement of the Stock Act of 2012 has been dismal at best, only met with small fines for late disclosures.     

If a corporation or private citizen makes trades based on private information that said individual or corporate entity would be subjected to punishment or indictment by the SEC or the FBI.  Allowing publicly elected officials to hold stock is a crime to humanity, to the people in which they represent.  Publicly elected officials have a fiduciary and civic duty to the people they represent.  When there are blurred lines in this relationship, corruption occurs and self-interest reigns supreme.  Unfortunately,  such measures to eliminate publicly elected officials from holding stock are by way of Constitutional Amendment.  There is very little motivation by the powers that be to eliminate their ability to accumulate material wealth while in public office.  I leave you with this to say, should an individual who has prior knowledge be able to privately gain from it, should we allow our nation’s elected officials to continue to gain from their public office?