Leveling the field in the Stock Market game.

Leveling the field in the Stock Market game

Take our self-test

You are the CEO of a publicly held corporation. You are escorted into a meeting room. Around the perimeter are tables with stacks of money. One of the tables has a large stack of money with your name on it. Your guide states that the stack with your name on it is technically yours. This stack of money represents your stock options. The guide states that the more money you remove from the meeting room will leave less for the remaining stockholders.

How much of the money would you remove from the room?

All the money on your table
Some of the money on your table
None of the money on your table, because your salary is all you need
All the money on your table plus as much money as possible from the other tables

The Stock Market is clearly a game. The problem with the current game is that it is stacked against the small investors. We need to level the playing field of the Stock Market game. With the current downturn in the market who is getting hurt the most? The CEOs knew their companies were sinking and cashed out early. The large money managers and mutual funds were next out the door leaving the 80-year-old retiree holding the useless company stock. We need to give the 80-year-old retiree a fighting chance next time. In most cases the CEO and mutual fund managers did nothing against the rules.

Our solution to level out the Stock Market game

Part I

Insider trading is currently not against the rules. There are restrictions as to how the insiders must report their trades. There is no way to prevent an insider from having more information on their company than the 80-year-old retiree. We can change the rules to ensure that the insider trader does not benefit from this information.

New Rule #1 to level out the Stock Market

Insiders who sell company stock must wait a minimum of one year before receiving any personal profits from the sale of their company shares. Example: CEO sells 10 company shares on the open market at $1.00 per share. The $10.00 is held in the company bank account for one year. If the current market rate were ten cents after one year, the CEO would get $1.00 and the remaining $9.00 would be kept in the company bank account. If the current market rate were $2.00 per share, the CEO would get all $10.00. Note: The CEO can only get the maximum held in the company bank account.

Insiders who buy company stock must wait a minimum of one year before receiving any personal profits from the purchase of their company shares. Example: CEO buys 10 company shares on the open market at $1.00 per share. The CEO must wait one year to see how many shares are issued. After one year the if shares are worth $2.00, he is issued 5 shares and the other 5 shares are returned to the company as unissued company shares. If after one year the shares are worth ten cents each, he is issued all 10 of his shares but his value has been reduced to $1.00.

Part II

Some of the insiders clearly took option “D” in our little self-test. We need to scare them enough that they would never think of selecting option “D”.

New Rule #2 to level out the Stock Market

The biggest fear of the rich is not going to jail. They know that the length and conditions will not be bad. Their biggest fear is to be poor like us. We need to take all of their toys away. I mean their homes, cars, clothes, and gifts they gave to other people. They need to be required to live on a maximum of $25,000 per year for up to 10 years. Any revenue over the maximum is given to the government to help repay the stockholders until all the funds are repaid.

How do we make the above solutions a reality?

The best solution would be to pass new laws by the US Senate and House. It could take years to pass a new law. Second choice would be that publicly held corporations could change their “By Laws” of the corporation on how they handle insider trading of shares. The stockholder trust would be the main benefit to the corporations that change their “By Laws”. The corporation could also attract new investors to purchase their corporation stock because of the new "By Laws".

Take Action On Your Own

If you agree with this solution posted on the website, you can help by doing one or more of the following:

Print the solution and send to the appropriate government or other organizations that can assist in implementing the solution.
Modify your lifestyle to reflect your beliefs.
Support organizations that can help make the solution a reality.
Get involved.
How to find your elected officials: TownHall.com has a section where you can find out who is your elected officials in your area.

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Email: dholm@icebergahead.org