By Robert Rizzuto
When Congress united and passed the Stop Trading on Congressional Knowledge (STOCK) Act, critics charged that House Republicans watered it down from initial versions of the bill but a loophole reported by CNN this week is drawing a response from Sen. Scott Brown, R-Mass., who is fighting to close it.
The STOCK Act aims to hold federal lawmakers and many federal employees to the same insider trading rules citizens are held to by penalizing anyone who is found to use knowledge obtained through their federal jobs to make money on stocks, bonds and other investments. The bill gained popular following after a 60 Minutes report uncovered that members of the House and Senate from both political parties coincidentally cashed in from investing in industries which were potentially subject to regulations they were debating.
The loophole causing a stir refers to the House of Representatives and Executive Branch's interpretation of a provision requiring members of Congress to report any transaction of $1,000 or more made after July 3. Although the Senate Ethics Committee applied that provision to members of Congress as well as their spouses and dependent children, the House Ethics Committee and the Executive Branch's Office of Government Ethics aren't applying the provision to family members.
Brown, who is in a heated re-election campaign against Democrat Elizabeth Warren, sent letters Friday to President Obama and House leaders John Boehner, R-Ohio, and Eric Cantor, R-Va., asking for them to take action immediately to close the loophole and apply the provision to family members as well.
"As the original sponsor and advocate of the STOCK Act in the Senate, the Senate clearly intended for the periodic transaction requirements to apply to financial transactions of spouses and dependent children," Brown wrote. "I believe the Senate Ethics Committee reached the proper conclusion when it released guidance stating that 'Senators and senior staff must disclose not only their own transactions that meet the threshold, but they must also disclose those of their spouses and dependent children.' It is deeply troubling that the House of Representatives and Executive Branch would attempt to operate under a substantially weaker interpretation of the STOCK Act than the Senate. I ask that you reconsider the interpretation that has caused a loophole in the STOCK Act and close it immediately."
The original 60 Minutes report questioned Boehner, GOP Speaker of the House, in relation to his purchase of health insurance stock days before he led a charge to kill the part of the federal healthcare overhaul that would have allowed government-funded insurance to compete with private insurance providers.
The report pointed out that House Minority Leader Nancy Pelosi, D-California, and her husband purchased 5,000 shares of Visa stock as the House voted against further regulating the credit card industry. Following the vote, her stock value doubled, according to the 60 Minutes report.
Brown continued to tout his role on getting the STOCK Act passed on Friday, speaking to employees at the Marr Companies in South Boston.
Brown credited Maine Republican Sen. Susan Collins and Connecticut Independent Sen. Joe Lieberman with helping to get the act passed, but also recalled a chance meeting he had with President Obama after the State of the Union address, once the committee work on the bill had been completed.
"I said to him, Mr. President, my insider trading bill's on [Senate Majority Leader] Harry Reid's desk, tell him to get it out. He looked right at me and said 'I will, I will,'" Brown said. "That was the extra, extra momentum. I'm not saying it would have never gotten done. It was the extra momentum that actually moved that forward."
When the STOCK Act was the hot topic in Washington earlier this year, Warren took a stance supporting it, adding that if she was elected, she would take things one step further by selling all the stocks she currently owns.
"I don't think members of Congress should be voting on issues relating to the individual stocks they hold," Warren said. "Members of Congress shouldn't be allowed to own individual stocks -- period."
Recently, the Washington Post reported that the Assembly of Scientists which represents senior federal researchers and the American Foreign Service Association both pushed against the STOCK Act's disclosure requirements, saying it could put its members in danger.
In August, a myriad of federal agencies as well as the House and Senate will have to post investments over $1,000 made by its members online within 30 days of the transaction. Prior to the new law, members of Congress were only required to disclose such transactions annually and the information wasn't readily available on the Internet.