When it comes to insider trading, the person who is the "insider" is the individual who is part of the management of a company and has information about this endeavor and makes his or her trade based on having privileged information.
Doing this undermines the faith individuals have on the market and is unfair to investors who don't have access to this same information.
It isn't necessary to be a corporate insider to be found in violation of the laws regarding insider trade. You also don't need to have any privilege information regarding the stocks you are trading. In the past authorities have gone after lawyers, printers, analysts, journalists and other non-insiders, for alleged or actual violations.
Insider trading, however, is permissible if you happen to be a member of Congress, or work for one, you don't need to worry about being sent to jail for using the information you learn on the job to make huge profits in the market. Although there are rules that protect ordinary investors from being put at a disadvantage to those who have access to better information, these rules don't apply to you.
It is just as unethical to use inside authoritative information for trading securities as it is to use inside business or corporation information for the same exact purpose. In both cases, one of the parties in the transaction has access to information that the other parties doesn't have. Congressional aides and legislators might have access to information regarding tax changes or new regulations that can have a significant impact on specific companies and industries.
It could be required that legislators and those who work for them only invest in index funds and other types of highly diversified mutual funds. That would allow them to still benefit from taking advantage of the growth potential offered by stocks and their personal fortunes being tied to the economy, without them having the chance to manipulate their holdings due to industry-specific information that they have access. Another potential solution would be to require legislators and their top aides to have their investments quarantined in blind trusts, that they cannot directly control, while they are serving the public.
We are currently in a situation where the lawmakers of this country (U.S) are freely allowed to do what is completely illegal for everyone else do. Congress, of course, has the power to inform citizens what is legal and unlawful for them to do. After all, that is their job. However, the laws that they pass must apply to them as well. If a member of Congress has access to company inside information and then uses it to her or his advantage, then that is Congress insider trading. That is completely unethical, and it should be illegal also. It definitely needs to stop.
When the individuals who make our laws have become too addicted to the markets to take a step back from their trading, then it's time for them to find some other kind of work to do. And if insider trading in Congress keeps being ignored, then voters should think about voting in a new group of legislators.
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