Ever get the feeling that legislators come up with the acronym for a law first, and then come up with the words to fit it? Yeah, neither do we.
Anyway, the “STOCK Act”—also known as the “Stop Trading On Congressional Knowledge Act”—was enacted in 2012 in an effort to prevent members of Congress from engaging in insider trading. That’s right: we legit have a special law to prevent our own members of Congress (and their staff members) from engaging in illegal trade activity. [facepalm]
Anyway, this act came about because members of Congress, and the people who work for them, are often privy to a bunch of confidential, sensitive, top-secret information. The kind of information that a person could use to make a killing in the stock market, if they were so inclined. Think about it: new regulations, defense contracts, spending bills…all of that stuff goes through Congress. And the sentiment behind the STOCK Act was that it sure would be unethical for the people in charge to use it for personal financial gain. Ergo, it was decided that (a) folks in Congress are not allowed to use non-public info to guide their personal investments, and (b) they need to disclose new mortgages and certain financial gains within 45 days. The hope is that the new regulations, on top of ethics rules that already exist, will help our elected officials resist the temptation to game the market.
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Finance: What is Regulation Full Disclos...43 Views
finance a la shmoop. what is regulation full disclosure or in industry parlance
reg FD ?all those whispery hallways of the 1970s and 80s
insiders muckety-mucks cheaters Liars deceivers key employees on the take [men in suits discuss stocks]
sound like the dramatic cover for a Hollywood movie and while it was and it
was real life as well. the practice of gleaning information
essentially unavailable to the average investor was a large part of the
practice of quote doing research unquote for all too many of the professional by
side investment firms of the era. the regulator's finally noticed and began to
crack down with only modest success for a while when finally reg FD was enacted
via the SEC in 2000. well that regulation massively prohibited the type of
discussions that could legally happen among analysts and company insiders. in
fact disclosure of much more than much more than the company name mailing
address and the product they sold was prohibited unless it was done in a
broadly available and well-publicized public forum that John Q public could [woman gives presentation]
participate in. the goal here was to take away free money or profits or gains from
insiders leaking information you know so that investors could make bets with way
more information on whether or not the roulette wheel of the company's
quarterly performance in earnings was going to in fact land on red twenty
three. so yeah that's what reg FD is about. trust us we've fully disclosed
everything we know about it and we're going modern here. modern era people come
on get with it. [man folds arms inside casino]
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What is insider trading and the Securities Fraud Enforcement Act of 1988? It's nothing too complicated, if this minute long video is any indication.