How Government Insider Trading Corrodes Democracy
When judges or legislators break the law to enrich themselves in ways that would land you or me in jail, it damages democracy
Republicans — and a few Democrats — have done a pretty good job of putting the grift in grifter. Most recently, the notoriously corrupt Senator Tommy Tuberville told a reporter for the UK Independent newspaper that efforts to ban his ability to make millions off insider information in the stock market would discourage other grifters from going into politics and, somehow, that would be a bad thing.
“I think it’s ridiculous,” Tuberville told the newspaper. “They might as well start sending robots up here... I think it would really cut back on the amount [sic] of people that would want to come up here and serve.”
This is beyond disgusting: Tuberville and every other legislator or judge who wants to make money by exploiting insider information on the stock market should find a different occupation. America already has too many crooks in the vital bloodstream of our politics and governance.
When government officials or legislators break the law or do things to enrich themselves that would land you or me in jail, it damages democracy.
It encourages cynicism among voters, a loss of faith in our government, and when it’s routine it draws grifters and hustlers into politics to get in on the scam. Most recently and famously, grifters like Trump and the people he surrounded himself with.
Consider how Trump and his buddies in the Cabinet and Senate made out like bandits on the inside information of a coming government shutdown from Covid in early 2020.
Before the Trump administration publicly announced the coronavirus was in America and they were planning to shut down the government, they held a private briefing exclusively for senators.
If you could get your hands on that juicy bit of insider information, you could make or save a fortune, although, if you were an average person, you’d also go to prison for years for trying it. That would be a con on the scale they make movies about.
Yet here we are.
Within minutes of walking out of that briefing, North Carolina Republican Senator Richard Burr called his broker and dumped $1.6 million in stocks he held…just before the market tanked.
Burr then committed another insider trading and conspiracy felony by calling his brother-in-law, who then called his broker and dumped another quarter-million dollars of stock within in hour of Burr’s call.
It was so obvious and egregious that even the ethically challenged Fox “News” commentator Tucker Carlson called on Burr to resign.
Unlike George W. Bush’s Justice Department, which enthusiastically sent Democratic mega-supporter Martha Stewart to prison for making $45,673 off an insider stock tip, Attorney General Bill Barr’s Department of Justice decided not to bother prosecuting Senator Burr.
But Burr was just in the bow of a ship filled with corrupt Trump insiders making out big on inside information.
Alabama Republican Senator Tommy Tuberville, also one of the insiders in the January 6th coup attempt, broke the laws on insider trading that would have landed you in prison over 130 times, according to Business Insider, and cashed out $849,000 in the process.
Former Georgia Republican Senator Kelly Loeffler and her husband (the president of the New York Stock Exchange) “dumped millions” worth of stock the day of and soon after Trump’s private briefing.
Her Georgia colleague, then-Senator David Perdue (now running for Georgia governor) jumped in after the briefing both selling and buying almost $3 million worth of stock, including purchases of DuPont’s stock, a company that was gearing up their manufacturing capability for personal protective gear for both private and government markets.
Even Rand Paul got in on the grift, his wife purchasing stock in Gilead Sciences, which then manufactured the main anti-viral drug being used to try to treat Covid. And it continued right through the end of Trump’s administration and into Biden’s, as David Leonhardt wrote for The New York Times:
“In all, members of Congress and their immediate families bought more than $260 million worth of assets and sold more than $360 million last year, DealBook has reported. Karadas’s research found that many of the outsize stock gains in recent years flowed to high-ranking Republicans.”
Just like with Senator Burr, Attorney General Bill Barr was a-okay with Trump’s buddies criminally enriching themselves off the death and destruction of the pandemic.
Nobody knows how much other Trump insiders, including members of his family and his Cabinet (and maybe Bill Barr?), made by dumping or shorting stocks in the lead-up to Covid shutting the government down in March 2020, because none have cooperated with reporters or investigators; the STOCK Act only requires “disclosure” by members of Congress.
But with several grifter billionaires in his cabinet, it’s a safe bet that billions were made off the third largest stock market drop in American history. Wealthy people with professional money management often make as much or more when the market goes down steeply as when it goes up over time; it’s the small retail investors and personal retirement accounts that get screwed in a crash.
Trump also apparently called some of his wealthiest donors, people he’d rewarded with ambassadorships, as CNBC noted in a July, 2020 article titled Trump Ambassadors Sold Stocks as President Downplayed Pandemic and Virus was Spreading:
“Ambassadors to Uruguay, France, Morocco and Italy sold shares in transactions that could have made them millions of dollars, according to financial disclosure filings reviewed by CNBC.”
Other Trump ambassadors saw the coming pandemic, CNBC noted, as an opportunity to invest in “companies involved with research or developing products that are linked to treating patients that have contracted the coronavirus, such as biopharmaceutical firms.”
This has been going on for a long time.
Back in 2006, then-Congressman Brian Baird dropped by my radio studio in Portland (and also shared with Sam Seder’s Majority Report show — we were both on Air America then) that he’d just come from a Republican colleague’s office where he saw members of his staff day-trading on inside information.
Press reports suggested that was the office of House Speaker Republican Tom DeLay, who was later accused of multiple unrelated felonies in Texas. Sure enough, criminal opportunities to make money in ways that would land the rest of us in prison does, in fact, attract criminals to politics.
Baird’s revelation — and extensive subsequent reporting that found this was widespread across Republicans in Congress along with a small minority of Democrats — led to President Obama signing the STOCK Act in 2012 that required such “radical” transparency that shame and embarrassment would effectively outlaw insider trading by members of Congress.
Nonetheless, it continues to this day.
Another reason why legislators and judges (particularly on the Supreme Court) shouldn’t own individual stocks is because their decisions often affect the price of those stocks and thus their own personal wealth. Government can’t be credible when it’s filled with conflicts of interest.
Democratic Senator Joe Manchin’s ownership of a family coal business is the poster child for this; he made a half-million bucks last year off his own fossil fuel business at the same time he voted to kill the Build Back Better legislation that would shift the country off coal. It’s hard to top that.
Nonetheless, it’s been difficult to get this fully criminalized, and the STOCK Act of 2012 that only requires disclosures (which is how we found out about the scammers listed above) has few teeth and, as far as I can find, has never been seriously enforced.
We need a law with actual, predictable criminal penalties for those making money by breaking the public trust like Tuberville, Burr and others do now with impunity.
Over the past two weeks, facing pressure from the public and the Congressional Progressive Caucus, Speaker Nancy Pelosi just did a 180 to join Senate Majority Leader Chuck Schumer to support legislation to more solidly outlaw government insider trading.
Pelosi is insisting it extend to the federal judiciary — including the Supreme Court — as well.
While there is a federal code of conduct for judges that should prevent them from ruling in cases involving companies whose stock they own, an investigation by The Wall Street Journal found hundreds of examples of judges routinely ignoring it. And the Supreme Court has exempted itself from it altogether.
The Constitution not only allows Congress to “regulate” the Supreme Court and other federal benches, it’s the only body that can do so. (Article III, Section 2: “[T]he supreme Court shall have appellate Jurisdiction, both as to Law and Fact, with such Exceptions, and under such Regulations as the Congress shall make.”)
Combining accountability for members at the top of the Articles I and III branches of government, along with bringing back accountability to the (Article II) Executive branch by prosecuting Trump and his cronies, are necessary for the healing of this nation.
It’s high time we outlaw such naked corruption in our government.
Heehaw — just another shovel-full of corruption in an overflowing stall. Is there any clearer evidence of an out-of-control plutocracy (in every other way but name only) when the dominate members of the herd are only in it for the hay? };--))
Speaking of out-of-control corruption at the highest levels — almighty rich white men flaunting the law — the latest media dribs and drabs about the former “law and order” president (in name only) deliberately and knowingly hiding and destroying critical presidential records like a spoiled brat in every manner possible, including (a safe bet) highly classified material: packed off in boxes, burned-up in bags, ripped-up nonchalantly, and even chewed-up ridiculously like in Spy vs Spy. Low on the ladder, frustrated staff armed with tape and crime-scene gloves had to salvage what public papers they could from wastebaskets full of confetti and shards of history strewn around the Resolute desk.
And, naturally, there were wads of evidently damning documents periodically clogging the pipes under the Trump Twitter Throne in the White House residency. The media will soon dub this “jump the shark” episode of Republican-style Happy Days as “Toilet-gate.” King Trump the Paranoid, (maybe not so strangely, considering the treasure trove of newly leaked evidence) repeatedly complained in the past about shitters: “Not enough water. You gotta flush the damn thing, like, 15 times.” Mmm... Most of us just assumed he was full of shit, literally. Well, that too ...you know, that McDonald’s diet.
And, Russia, if you’re listening, the 15 boxes squirreled away at Mar-a-Lago contain Hillary’s 30,000 emails (ha ha, more grist for My Pillow Guy's conspiracy-theory mill). Some of Trump’s weirdness you can make up. Have fun. Most of it you simply can’t.
But seriously, why the deafening silence and lame excuses from Republican leadership? The answer to that shopworn rhetorical question is all too obvious; but even more seriously, why the seeming dereliction of duty in the Office of the Attorney General of the United States of America? Or is that also a title in name only? Prove the naysayers wrong, sir. Quickly!
"Ayn" Rand Paul and The Free Marketeers are doing their level-best to show us that it's OK for the invisible hand to wear a black leather glove when there's money involved. Irony intended.
Just another day of perpetual disaster capitalism. The Shock Doctrine (Naomi Klein) does a nice job elaborating on some of the components of Thom's piece.
As for corruption and cronyism, my grandfather was quite outspoken on both. In 1972 he penned an op-ed in the local paper calling out a particular multinational corporation for stacking certain city commissions. This corporation was headquartered in the area at the time, and from my own research, was involved in quite a bit more than corrupting municipal boards - perhaps acting criminally at the international level.
Anyways, in his final sentence he wrote: (paraphrasing) You don't put a goat in charge of watching over your cabbage patch.
My grandfather thought himself a mainstream Republican.
I know this type of rot exist in both the GOP and Democratic party, but holy shit - sometimes a personal account of events really exhibits how far one party has fallen in relatively short order. Unfortunately this means some sectors of the Democratic party have decided that following suit is the best method of survival.
I guess this is what we refer to as "a race to the bottom".