Last week, the Pulitzer Prize Board announced the 2023 winners of its coveted and prestigious awards for excellence in journalism.
Among the recipients were staff for the Wall Street Journal, who received recognition in the category of Investigative Reporting for bringing to light officials at federal agencies who bought and sold shares in companies they regulated.
The seven-part series reviews trades reported by approximately 12,000 senior career employees, political staff, and presidential appointees.
The series details the inconsistencies in conflict-of-interest policies across government agencies and how much of this activity, while technically disclosed, is never made available to the public.
The breadth of data is meaningful, and the anecdotal examples lead to the conclusion that there is more here than just an appearance of impropriety.
This is not the first time government officials charged with safeguarding the public’s interest have been accused of this unethical behavior.
In 2011, Peter Schweizer published, “Throw Them All Out,” which chronicled in great detail the existence of “crony capitalism” and its “corrosive effect on politics, our economy and our character.”
Mr. Schweizer’s work focused heavily on trades by congressional members during the mid-2000s financial crisis and proved to be the catalyst for Congress passing the Stop Trading on Congressional Knowledge Act (STOCK Act) in 2012.
While the STOCK Act applies to all federal officials, it is not equally administered. Federal agencies like the FDA, FCC, IRS and others have discretion on what is demanded among their staff. The absence of uniformity has created a lack of confidence on the rule’s efficacy to instill public trust that government officials who are privy to material and non-public information will not use that knowledge to benefit themselves at our expense.
More needs to be done in order to ensure that there are no occurrences nor the appearance of insider trading by government employees.
Legislation currently being considered in Congress ranges from an all-out ban on trading to a “more of everything” approach. This means more uniformity in the administration of conflicts-of-interest policies across federal agencies, more resources to the Office of Government Ethics, more education so the public can understand the difference between discretionary trades executed by a financial advisor versus trades executed directly by the employee, and more transparency in the form of public disclosure on trading activity by federal employees.
Occurrences or appearances of insider trading erode the public trust in government and undermine our democracy by destroying the reputations of the government and its institutions.
Joe Toes, a Manhasset resident, is president & CEO Security Traders Association