Golden urges more restrictions on trading by Congressmen

Congressman Jared Golden, Democrat of Maine, is one of 27 members of the US House of Representatives who have called for a vote on a bill that would ban lawmakers from trading stocks.

LEUISTON, Maine – Congressman Jared Golden has joined 26 other members of the US House of Representatives to support a bill to increase restrictions on members of Congress trading individual stocks.

Lawmakers from both parties wrote to the House leadership on Monday to demand a vote on a bill that would prohibit members of Congress from owning or trading stock.

Two bills introduced in this legislative session to which the group refers are the Contradictory Trade Prohibition Act and TRUST in the Act of Congress.

“We feel that membership in Congress is about public service and should not be about using the office to enrich yourself,” Golden said in his office in Lewiston on Tuesday.

The laws in force penalize private sector executives, and anyone with secret knowledge, from insider trading. Professional athletes are prohibited from betting on their own games for the same reason: using information that the common investor does not possess creates an unfair advantage that benefits the individual and negatively affects the market for the investor.

Golden said Tuesday that he is not against members of Congress saving money for the future or for retirement, but he does not want his colleagues to take advantage of insider knowledge that ordinary American citizens don’t have.

The Contradictory Trade Prohibition Act would prevent members of Congress and some employees from holding or trading individual stocks except through blind trust. The bill would also prohibit those same persons from taking seats as a member or officer of any for-profit board.

The Congressional Trust Act would require the same prohibition of trading for members of Congress and require them, their spouses and dependent children to place any individual shares in a blind trust and that trust will expire 180 after the members of Congress’ tenure in office.

Congresswoman Chile Pingree, D-Maine, supports legislation that would ban members of Congress from trading stock, specifically the Congressional Trust Act, according to a spokesperson.

The Stock Act of 2012 requires members of Congress to report all trades that take place in the stock market within a predetermined time frame after the deal.

“There’s a law out there that obviously doesn’t work,” Golden said.[The stocks] He must be in blind faith. When you do not have the ability to use the information given to you as a member of Congress in order to make these investments.”

Burt Smolok is Professor of Finance at the University of Southern Maine. He said politicians’ exploitation of the market benefits them and harms the average investor without inside knowledge.

“It comes at the expense of the average investor and the average investor will lose confidence in the market,” he said.

Legislators who use the basic information to either buy more shares or sell shares will affect the average investor. Smolok said that if someone wanted to invest in stocks that a certain politician had invested heavily in, the person would have to pay a higher price for the stock.

The reverse is also true: if a politician sells a stock because he knows something will affect the price, the individuals who own the same stock will be forced to see their stock at a lower price.

Golden said some politicians are abusing their power by manipulating the stock market to their advantage.

I hope to take the Speaker [the letter] “Seriously, he listens to us and listens to us and the American people listen to us and bring the bill to the ground,” Golden said.

He said he did not know if or when the House leadership would respond to the bipartisan message and bring a bill to a vote.

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