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Public Statements

Stop Trading on Congressional Knowledge (STOCK) Act

Floor Speech

By:
Date:
Location: Washington, DC

Mr. WALZ. Mr. Speaker, I rise today on behalf of myself and Representative Louise M. Slaughter to note the end of a successful journey in good government reform. Six years ago, the Stop Trading on Congressional Knowledge (STOCK) Act was introduced for the first time in the House of Representatives. We reintroduced this bill for the fourth time on March 17, 2011 and a little over a year later, we are proud to see the language we introduced to ban insider trading, signed into law.

Since the President signed the bill (S. 2038, 112th Congress; P.L. 112 105) on April 4th, 2012, we would like to submit for the record our intent in regards to banning Congressional insider trading with the STOCK Act. This overwhelming bipartisan legislation is a significant accomplishment for Congress, and we would like to have the record state our original intent.

Though Members of Congress and their staffs, executive branch employees, and federal judges and other federal judicial employees were not exempt from the insider trading prohibitions at the time, we deemed it important to affirm explicitly that no such exemption existed and that these individuals do in fact owe a duty of trust and confidence to the U.S. government and the American people. [See, e.g., Statement of Robert Khuzami, SEC Director of Enforcement, to Committee on Homeland Security and Governmental Affairs (Dec. 1, 2011); SEC v. Cheng Yi Liang, et al., Exchange Act Rel. No. 21097 (March 29, 2011 (bringing insider trading charges against a FDA employee alleging that he violated a duty of trust and confidence owed to the federal government under certain governmental rules of conduct when he traded in advance of confidential FDA drug approval announcements); United States v. Royer, 549 F.3d 886 (2d. Cir. 2008) (affirming a conviction of an FBI agent for tipping information about ongoing investigations and information on law enforcement databases); SEC v. John Acree, Litigation Rel. No. 14231, 57 SEC Docket 1579 (Sept. 13, 1994) (announcing a settled action with a former employee of the Office of the Comptroller of the Currency for trading on the basis of material non-public information concerning banks); United States v. Rough, Crim. No. 88 425 (D.N.J. 1988) (indictment of former New York Federal Reserve Bank member for revealing highly sensitive nonpublic information regarding changes in the Fed's discount rate); SEC v. Saunders, Litigation Rel. No. 9744, 26 SEC Docket 75 (September 2, 1982) (announcing settled action with the former Director for Communications for a division of the Naval Electronics Systems Command for purchasing securities while in possession of material nonpublic information concerning a contract award); Code of Conduct for United States Judges, Canon 4(D)(5) (stating ``A judge should not disclose or use nonpublic information acquired in a judicial capacity for any purpose unrelated to the judge's official duties''); Code of Conduct for Judicial Employees, Canon 3(D) (stating ``A judicial employee should never disclose any confidential information received in the course of official duties except as required in the performance of such duties, nor should a judicial employee employ such information for personal gain.'').]

In affirming that the insider trading prohibitions applied to these individuals in the same way they apply to everyone else, we made it perfectly clear that nothing in the Act--not the affirmation of the duties, nor the instructions to issue interpretive guidance, nor the interpretive guidance that may be issued as a result--can be construed to limit or impair the construction of the antifraud provisions of the securities laws or the authority of the SEC under those provisions. We included an unambiguous rule of construction applicable to the entire Act, as well as unambiguous savings clauses in the amendments being made to the Exchange Act, that make that clear.

Thus, when the Act instructs the Ethics Committee, Office of Government Ethics or Judicial Conference of the U.S. to issue interpretive guidance to clarify that government officials cannot use nonpublic information as a means for making a ``private profit'', this is not intended to--and in fact does not--limit or more narrowly define any insider trading requirements that currently exist in the law, nor limit or more narrowly define any ethical prohibitions that may currently exist. Similarly, when the Act says that nothing in the Act shall be in derogation of the obligations, duties or functions of Members or employees of Congress, this is not intended to permit Members or staff to use this provision as a shield to forestall liability for insider trading.


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