I have worked for two different financial institutions, and both of them required me to make initial and ongoing disclosures regarding my investments (as well as investments made by members of my immediate family). I am also subject to a number of related restrictions, including the requirement that I pre-clear certain stock trades.
It's bewildering to me that government officials apparently are not subject to ANY binding rules/restrictions with respect to their investments and conflicts of interest. The article attached here - involving federal judges - is just the latest in a series of infuriating stories, and comes on the heels of recent outcry over the investment activity of two Federal Reserve Presidents. And of course investments and conflicts of interest have been an ongoing issue in Congress. (Lest anyone think I'm taking sides here, let me say that this is a bipartisan problem -- it reaches Nancy Pelosi AND Rand Paul.)
There are a couple of potential solutions, one of which involves trusts (in case you were wondering why I am talking about this issue):
1. Adopt a disclosure/restriction system like the one to which I am subject. I would also impose automatic impeachment or removal if you fail to fully disclose. We are talking about smart, sophisticated people here -- or at least we should be. If you claim not to know what investments you own, my opinion is that you are either (a) lying or (b) too clueless to function in any important position.
2. Use a blind trust. In a blind trust, the grantor places property into a trust for his or her own benefit, with an unrelated third party as trustee. The trustee then invests the trust property, but -- and this is key -- DOES NOT TELL THE GRANTOR HOW THE TRUST ASSETS ARE INVESTED. One thing to beware of is what I call the "fake blind trust," where the grantor places his or her business into a blind trust. The fact that someone else then starts running the business makes no difference, since the grantor still knows what is owned by the trust. Bud Selig tried to pull this when he became Commissioner of Major League Baseball, placing his voting shares in the Milwaukee Brewers into a blind trust. (Donald Trump tried to do something similar when he became President.) Both of those cases also involved naming the grantor's child as trustee of the blind trust, which again defeats the whole purpose (since the grantor can easily find out what the trust's holdings are and what's going on with them, simply by asking the trustee). In an effective blind trust, the grantor doesn't know how the trust is invested AND can't contact the trustee to discover this information.
#blindtrusts
