Keeping an eye on our public servants — The integrity of our financial markets depends on disclosure and fairness

As a Chartered Financial Analyst, I am bound by the CFA Code of Ethics. As a registered financial advisor, I operate under federal law that recognizes me as a fiduciary. Both sets of rules require me to behave better than my local congressman.
The integrity of our financial markets depends on disclosure and fairness. All investors must be assured of a level playing field, or else the whole thing falls apart.
While insider trading is clearly defined in the law, many people have no clue what it is. Trading on ANY information that has not been made public is insider trading. It doesn’t matter if you got the information from the CEO or from the janitor. If you make hay off an inside tip, you could find yourself in jail.
In the South, such tips are often seen, simply, as friendly advice. There are stories of Mississippi executives calling buddies and letting them in on big announcements. No one understands that they could be breaking the law. Just a couple folks gossiping over the fence. Who cares if you make a few extra bucks off the information?
Congress is exempt from the same laws that I have to operate under. They are not required to put their constituents first. And by their own sets of records, they are profiting grandly from trading on inside information.
There is a move to stop this activity. It’s called the STOCK law. Surprise, surprise. It can’t seem to get enough votes to pass. Even if it passed, would this stop these guys from making a few extra dollars on the side? Probably not. Insider trading is difficult to prove. What did they know? When did they know it? And did they make money off the knowledge? It’s a tough case.
Instead, I propose requiring the people in the know to invest in pooled funds or blind trusts. And they must go long and stay long regardless of a meeting with the Fed declaring the end of the world. Finally, they should be required to have professional financial advisors calling the shots, people who have a lot at stake if they break the law.
For now, I’m planning to send a copy of the CFA Code of Ethics to each of our congressmen. At least, now they know we’re watching!

Nancy Lottridge Anderson, Ph.D., CFA, is president of New Perspectives Inc. in Ridgeland — (601) 991-3158.  She is also an assistant professor of finance at Mississippi College. Her e-mail address is, and her website is

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2 Responses to “Keeping an eye on our public servants — The integrity of our financial markets depends on disclosure and fairness”

  1. Reba G. Cook Says:

    Congress exempts themselves from ALL laws. They aren’t subject to the Civil Rights Act or for paying minimum wage, for example. I assure you, they have no intention of changing this. Neither do the newly elected – they love the exemptions, too!

  2. Kasie Dugger Says:

    I think it is a truely smart point of view. I most often meet people who rather say what they suppose others want to hear. Good and well written! I will come back to your site for sure!

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