Senate Democrats on Monday rallied on Capitol Hill in support of the STOCK Act, a bill to prohibit insider trading by members of Congress. The Senate is set to vote on the bill, S. 2038, Monday evening.
President Barack Obama said during his State of the Union address last Tuesday that he’d be ready to sign a bill banning insider trading by members of Congress “tomorrow.”
On a Monday conference call with reporters, Sen. Kirsten Gillibrand, D-N.Y.; Debbie Stabenow, D-Mich.; and Jon Tester, D-Mont., echoed the same sentiment: that insider trading by members of Congress should be banned and that lawmakers should “not be above the law.”
Gillibrand told reporters that she “was shocked” to learn, as were millions of Americans, that current laws do not ban such activities by lawmakers. The Securities and Exchange Commission as well as the Commodity Futures Trading Commission, she said, “must be empowered to investigate cases” of insider trading by members of Congress and their staffs.
While Congress has not been exempted from insider trading laws, the Senators explained that some legal experts have questioned whether an insider trading case could be brought successfully against a member of Congress 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, however, ”makes it clear that trading on non-public information would violate the duty of trust members of Congress and their staff owe their constituents by establishing a clear fiduciary responsibility.”
Stabenow stated that lawmakers “shouldn’t be in a position to use information for [their] own personal gain.” Passage of this bill is a “very important signal to send to the public,” she said, as it will show “that [lawmakers] need to follow the same rule as everybody else.”
Tester told reporters that it’s “very important that Congress is transparent and accountable,” and the STOCK Act “will make sure the work we do is crystal clear.” Tester said that financial disclosure requirements by members of Congress are also included in the bill; all financial transactions by lawmakers would be made available in a “searchable database” and be filed electronically.
As it stands now, 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.
House Financial Services Committee Chairman Spencer Bachus, R-Ala., proposed legislation in January, H.R. 3549, which would subject members of Congress to new limits on how they trade equities and manage their wealth, and require lawmakers to place all their stocks, bonds and other securities into a blind trust that would be managed without their consent as long as they are members.