In the first major Senate vote of 2012, legislation co-sponsored by U.S. Senator Debbie Stabenow to prohibit Members of Congress from engaging in insider trading tonight passed the U.S. Senate by a wide margin, 96-3. The Stop Trading on Congressional Knowledge (STOCK) Act redefines insider trading to include knowledge gained from Congressional work and services and also creates transparency rules and reporting requirements.
"This bill makes crystal clear that Members of Congress must not be exempt from laws everyone else has to follow," said Senator Stabenow. "Any Member of Congress abusing his or her position for personal financial gain must be held accountable. The Senate overwhelmingly approved this bill today by a broad margin, showing bipartisan cooperation is possible. The House should follow suit immediately."
The STOCK Act will:
The STOCK Act Clearly Prohibits Insider Trading in Congress
Under the STOCK Act, members of Congress and their staff will explicitly be barred from buying or selling securities on the basis of knowledge gained through their Congressional service - or from using that knowledge to tip off anyone else. It is not true that Congress has exempted itself from insider trading laws. However, some legal experts have questioned whether an insider trading case could be brought successfully against a Member because, they argue, it is not clear that members owe anyone a duty not to trade material non-public information, in the same way that, for example, a corporate executive has a duty to the company's shareholders. The STOCK Act makes it clear that trading on non-public information would violate the duty of trust members of Congress and their staff owe their constituents.
The STOCK Act Significantly Strengthens Disclosure Requirements
Currently, members of Congress annually disclose the purchase or sale of securities and commodities. The STOCK Act not only imposes a tough 30 day disclosure requirement, but also requires that the information is published online to ensure complete transparency and easy public access to the information.
The STOCK Act Requires GAO To Investigate Role Of "Political Intelligence" Firms
The STOCK Act requires the Government Accountability Office to investigate the role of "political intelligence" firms, which try to learn inside information from lawmakers and their staffs and sell that information along to private clients.
The legislation now heads to the US House of Representatives.