Last week, 27 legislators signed a letter pushing House of Representatives leaders to react fast to bring "commonsense, bipartisan" law prohibiting Congressmen from holding or trading assets to the floor.
The letter described politician stock trading as an "outrageous problem" that will not go away unless Congress addresses it. While federal politicians have introduced a number of laws aimed at prohibiting parliamentarians from trading equities, the regulation may meet criticism from members who participate in the activity.
In a recent interview, Congresswoman Alexandria Ocasio-Cortez referred to the difficulties of getting Congressmen to regulate their own actions.
"It 's not a mystery to me why it's tough to pass," Ocasio-Cortez said in a big interview. "It wouldn't be a surprise if a significant majority of Congresspeople own and keep trading individual stocks."
Because members have access to private information, the approach of so-called insider trading in Congress has been widely criticized in recent years. Perhaps most infamously, the Justice Department investigated four lawmakers who sold considerable sums of equities in January and February 2020 while being informed about COVID-19's impending danger. While the senators were not charged criminally, the inquiry brought to light the fact that Congress often has access to privileged knowledge that might have a meaningful impact on public businesses.
"I am a member of Congress," Ocasio-Cortez said. "Members of Congress have access to highly important security clearances. We have access to very comprehensive, customized briefings. Our goal is to predict and prepare for what we see approaching. And we should not be able to have access to such information while at the same time holding and trading individual stocks."
While House members are permitted to trade stocks, the Stop Trading on Congressional Knowledge Act of 2012 prohibits them from trading on "material, nonpublic knowledge" and forces them to declare transactions within 45 days. However, more than a few politicians have broken the STOCK Act: Insider recently did an investigation that revealed 54 legislators who refused to follow the rule's reporting obligations.
And according to Insider, 75 federal politicians had shares in Moderna, Pfizer, or Johnson & Johnson in 2020, while Congress approved billions to produce and deliver COVID vaccines manufactured by these same businesses.
One proposal recently filed to further restrict trading on private information in Congress would try to tighten the STOCK Act's disclosure standards. At the same time, Democratic Senators Mark Kelly of Arizona and Jon Ossoff of Georgia presented legislation in January that would restrict senators and their close relatives from holding or trading assets.
For her part, Ocasio-Cortez calls for a complete ban on asset trading activities, but she emphasizes that this would not stop Congresspeople from having a larger interest in the financial markets. "The point here is not to say you can't have a retirement plan or an education savings account... a blind trust... a mutual fund, an index fund," she explained. "These are broad investment entities over which individual members of Congress have no direct influence."
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