Insider trading bill: A model to end gridlock on Congress?
The Senate passed jobs and insider-trading bills Thursday, hailing a moment of bipartisanship. But times when members of Congress get along are rare – and that isn't expected to change.
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“The amount of trading that’s going on in Congress, even if we assume a worst-case scenario, is much too small to move the market,” said Rich Smith, a senior analyst at The Motley Fool, an investing website popular with hobbyist investors that has backed the STOCK Act. “But it looks bad. It destroys people’s faith in the market being a level playing field.”Skip to next paragraph
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The JOBS bill, on the other hand, with its PR-savvy name and wider-reaching aims, will have more of an impact on the public. The bill unites proposals allowing small businesses to raise money from small investors (known as crowdfunding), relaxing regulation for firms entering the public market, and allowing small firms to solicit investments via advertisements. It passed on a big, bipartisan vote, 73 to 26.
Nick Bhargava, a co-founder of crowdfunding website Motaavi, says that by stitching the bill's various proposals together, Congress may have established a new pathway for businesses to move from innovative idea to a place on the New York Stock Exchange.
“When you look at [elements of the JOBS Act] as a package, they all fit nicely together,” Mr. Bhargava says. “If you do this together, we think the long-term effects can be pretty significant, and you have a well-defined legal framework for the next great American company.”
Still, as many of the 26 Democrats who voted against the JOBS legislation pointed out, the bill has rather modest potential in the near term.
“The supporters of this bill claim it will help create jobs. They have even titled it the JOBS Act. But there is no evidence it will help create new jobs,” said Sen. Carl Levin (D) of Michigan on the Senate floor on Thursday. “There is not one study that its proponents have shown us how repealing provisions that protect us from egregious conflicts of interest ... will create jobs.”
John Engler, president of the Business Roundtable, told reporters at a breakfast sponsored by The Christian Science Monitor on Thursday that while the JOBS measure is important, “I would say just keep on going."
RECOMMENDED: What does the JOBS Act actually do?
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