STOCK Act to Stop Congressional Insider Trading Signed into Law by Obama
|Wednesday, Apr. 4, 2012 | ProCon.org | MORE HEADLINES|
Obama said in a statement from the White House that the STOCK Act "will help reduce the deficit of trust between this city [Washington, DC] and the rest of the country. We're sent here to serve the American people, and to look out for their interests -- not look out for our own interests."
According to the White House Office of the Press Secretary, the STOCK Act, which also applies to all employees in the Executive and Judicial branches of the federal government, "...affirms that Members of Congress and staff are not exempt from the insider trading prohibitions of federal securities laws... The Act makes clear that Members and staff owe a duty to the citizens of the United States not to misappropriate nonpublic information to make a profit."
The STOCK Act requires a study of the growing "political intelligence" industry, and requires every member of Congress to publicly file and disclose any financial transaction of stocks, bond, commodities futures, and other securities within 45 days on their websites, rather than once a year as they do now. The Act also requires members of Congress and Executive branch officials to disclose the terms of mortgages on their homes, prohibits them from receiving special access to initial public stock offerings, and denies federal pensions to members of Congress who are convicted of felonies involving public corruption.
A Dec. 2004 study in the Journal of Financial and Quantitative Analysis revealed that US Senators' stock trades performed 12.3% better than the market average, and 6% better for members of the US House of Representatives according to a May 2011 study in Business and Politics. No arrests or prosecutions have ever been made against members of Congress for insider trading based on nonpublic congressional knowledge.
The STOCK Act was introduced three times in the US House of Representative from 2006-2009, each time dying in committee. On Nov. 13, 2011, 60 Minutes reported that several members of Congress, including House Speaker John Boehner (R-OH) and former Speaker Nancy Pelosi (D-CA), allegedly used insider information for personal gain. The STOCK Act received 84 additional House co-sponsors in the five days following the report, and two versions were filed in the Senate within the next four days.
Representative Dan Lungren (R-CA), Chairman of the Committee on House Administration, hailed the signing of the STOCK Act as "a victory for government accountability," while Senator and STOCK Act co-sponsor Joe Lieberman (I-CT) called the measure "the most significant congressional ethics reform in at least five years."
David Jackson, "Obama: Stock Law Will Reduce 'Trust Deficit'," USA Today, Apr. 4, 2012
Dan Lungren, "Bolstering Public Trust in Government," www.thehill.com, Apr. 4, 2012
Office of the Press Secretary, "FACT SHEET: The STOCK Act: Bans Members of Congress from Insider Trading," www.whitehouse.gov, Apr. 4, 2012
Roger Runningen and Derek Wallbank, "Obama Signs Ban on Congressional Insider Stock Trading", www.bloomberg.com, Apr. 4, 2012