Problems:
- The SEC does not seek to investigate or punish the majority of financial crimes the happen in the stock market. This has been made very public by the UnusualWhales platform, where they highlight high volume trades moments before news is announced that impacts a given stock price dramatically. Other cases of clear insider trading are never prosecuted (see: covid trades by politicians for example).
- Hedge Funds, High Frequency Traders, Market Makers, etc all exist to extract value from transactions in the stock market. This value adds up over time, resulting in billions of dollars of profit per year. Those billions of dollars are stolen from retail investors, pensions and retirement funds. Literally stealing the savings from hard working Americans.
Solutions:
- SEC needs to provide simple and modern means of submitting tips for insider trading. These tips need to be followed up on, and not ignored just because the perpetrator is in a position of power or wealth.
- Trades (buy + sell) for a given ticker (in stock and across all options chains as well) that happen in under a minute be banned or taxed at a rate of 75%. This would remove the incentives for acting as a middleman and stealing pennies from billions of transactions. This would need to apply across all subsidiaries to prevent shell companies controlled by a parent company from splitting their trades across multiple companies to hide this activity.
- Regulate ETFs, ban all non-retail (hedge funds and institutions) from buying or selling ETFs as stock or options. This will remove the manipulation that occurs today where ETFs are shorted while individual stocks are purchased, allowing for the index to be manipulated to not reflect the transactions that are occurring.
- Institute a requirement for any professional or automated trading organization to publish all trades within 30 days of the transaction in a public standardized format. This will allow for identification of wrong doing to support SEC reports by any individual.
- Rather than banning congressional trades, update the rules to the modern era. Require automated reporting of all trades (this happens by requiring them to use specific brokers that will automatically report all of their trades). This reporting should be made public in real time instead of through periodic reports that are often filed months or years after the transactions occur. Any failure to report transactions within 30 minutes should result in a 100% forefiture of all gains.
Recent example of [1]: x.com