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 are Insider Trading And th...11 Views
Finance a la shmoop what is insider trading and the securities fraud
Enforcement Act of 1988? all right well the Securities and Exchange Act of 1934
aka the 34 Act made it formally illegal to use inside information in trading
stocks amazingly that used to not be illegal or at least not explicitly so [People gambling]
and it wasn't enforced investing was well a clubby white man's insiders gig
and the boys took care of the boys well since people could make a lot of
money with insider information and thought they wouldn't get caught like [Boy peeing at a urinal]
well who's gonna know that I overheard the CEO of big company talking about a
merger in a Denny's washroom you know some folks pretty much ignored
the law well the 1988 law was basically Congress saying you guys were really [Congressman discussing the 1988 law]
serious about this so this new legislation added some hefty penalties
if you get caught as an inside trader people still trade on insider
information though and they still get caught and they go to jail and they lose [Jail door closes on man]
everything they have so he's got to realize some of us were just born to be
bad...
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