Today, U.S. Senator Scott Brown (R-MA) formally requested that the Senate Homeland Security and Governmental Affairs Committee hold a hearing on "insider trading" in Congress and the Stop Trading on Congressional Knowledge (STOCK) Act of 2011 [S. 1871], which he introduced yesterday. The bill would prohibit members or employees of Congress and Executive Branch employees from using nonpublic information obtained through their public service for the purposes of investing or otherwise making a personal financial gain.
The STOCK Act was referred to the Senate Committee on Homeland Security and Governmental Affairs, where Senator Brown serves as the Ranking Member of the Federal Financial Management Subcommittee. Click here for more information on Senator Brown's STOCK Act.
The letter requesting the Congressional hearing is as follows:
November 16, 2011
The Honorable Joseph I. Lieberman
Senate Committee on Homeland Security and Governmental Affairs
340 Dirksen Senate Office Building
Washington, DC 20510
Dear Chairman Lieberman,
I feel strongly that public office, and the confidential information acquired as a result of holding such office, should not be used for private gain. The American people elect Members of Congress to serve in Washington for the good of the nation, not personal enrichment.
Unfortunately, because of a loophole in current law, it appears that elected officials can take advantage of material, non-public information to improve the performance of their own investments. According to a study by economist Alan J. Ziobrowski, between 1993 and 1998, the common stock investment portfolios of U.S. Senators beat the market by an average of 12% a year. During the same time, the common stock investment portfolios of U.S. households as a whole underperformed the market on average by 1.4% a year. Even more striking, corporate insiders investing in their own company's stock only beat the market by about 6% a year on average during that period.
Yesterday, I introduced the Stop Trading on Congressional Knowledge Act (S. 1871), which would prohibit Members and employees of Congress and the Executive Branch from trading or disclosing any nonpublic information they obtain because of their status. The Act further requires Members and employees of Congress to report any securities transaction in excess of $1,000 within 90 days. Finally, the Act will require political intelligence firms that obtain their information directly from Congress to register with the House and Senate, much like lobbying firms are now required to do.
At a time that our economy is struggling and the average American family has to make hard economic choices, Congressional members and staff should not be lining their pockets on insider information. I strongly urge you to hold a hearing on this issue in order to shed light on this activity.
Serving our country is a privilege. I believe we must level the playing field and show the American people that the United States Congress does not consider itself to be above the law.
Scott P. Brown
United States Senator
CC: Ranking Member Susan M. Collins