Insider Trading

1999-2024 | 25 years

In this episode, the President’s staff is five votes down on a bill restricting the sale of automatic firearms. Meanwhile, Toby has to meet with someone from the White House Counsel’s Office due to the suspicion that he has been involved in insider trading.

Insider trading is when someone who has information that the general public does not have access to uses that information to make investments. In this episode, Toby invested in a technology stock after arranging for a university professor, his childhood friend, to testify to the Commerce Committee about the future of technology. Because the jump in the value of the stock Toby invested in was attributed to the testimony of his friend, the Counsel’s office wants to investigate, but in the end, White House staff comes up with a solution to Toby’s problems, and an investigation never occurs.

It would be expected that the people who partake in insider trading the most would be business people, like lawyers, who have access to information about the deals companies are making, but it is actually Congress that is most known for their rampant insider trading. The most widely covered example of this recently comes from former Speaker of the House Nancy Pelosi. Pelosi’s husband is an investment banker, and he has made some suspiciously well-timed trades during the time Pelosi has been in office. In the two years following the Great Recession, the worst economic downturn in the US since the Great Depression, the Pelosis’ estimated net worth went up 220% while the S&P 500 fell 13%. And during the Pandemic, which is known for having caused an economic downturn, the Pelosis’ net worth increased by 60%.

In 2012 the Stop Trading on Congressional Knowledge Act or STOCK Act was created, to make them report their trades and stop members of Congress from buying and selling stock based on insider information. However as of yet not one of the at least 78 Congress members who have overtly violated this law have faced any sort of consequences.

There are many problems with trying to stop Congressional Insider trading. Firstly, it is difficult to prove. Secondly, some feel that it is not fair that civil servants would be unable to invest freely in the stock market as others in our capitalist society can. Lastly, the body that would have to pass the law regulating Congressional stock trading is Congress itself, and given the large economic gains they are making, they have no incentive to do this.

The American people empower their representatives to make extremely important decisions that have massive impacts on the future of our world. The fact that our lawmakers are so invested in these markets is worrisome because it is a conflict of interest. Often the stocks they are invested in belong to the companies they are tasked with regulating. Yes, we want to have a free market, but we also want to have a fair market, where the people who are supposed to be representing us are using the power we give them to bring improvements to our country rather than using this power to pad their own pockets.