Washington D.C. – U.S. Senator Kirsten Gillibrand today announced final Senate passage of the STOCK Act, bipartisan, common sense legislation to make insider trading in Congress clearly and expressly illegal. The Senate voted 96 to 3 to approve the bill. Senator Gillibrand has been a leading advocate for increasing the accountability and transparency of Congress.
“We are entrusted with a profound responsibility by the American people to look out for their best interests, and nothing else, certainly not our own financial interests,” said Senator Gillibrand, the first member of Congress to post her official daily schedule, all earmark requests and personal financial disclosure online. “Today, we took the first step toward restoring the trust that’s been lost in Washington by ensuring that members of Congress play by the exact same rules as everyday Americans.”
A news report in the Washington Post this week hailed the STOCK Act as the “most substantial debate on congressional ethics in nearly five years.” In his State of the Union address, President Obama called on Congress to pass this bill and send it to his desk to sign into law. The bill now awaits a vote in the House of Representatives.
The Senate’s STOCK Act explicitly bars a member of Congress, their staff and all federal employees from engaging in insider trading or otherwise using nonpublic information gained through their work for their own personal benefit, and clarifies that this provision constitutes a sufficient basis for the Securities and Exchange Commission (SEC) to investigate and prosecute members of Congress engaging in insider trading – including the “tipping” of non-public information. By incorporating feedback from witnesses at the December 1 committee hearing, the legislation directly corrects the ambiguity in existing laws to ensure that members of Congress, their families and their staffs are fully covered by insider trading laws. The legislation is carefully crafted to not alter existing insider trading law, but to simply ensure that members of Congress, their families, their staff and federal employees are fully covered by it.
The bill would establish for the first time a clear, fiduciary responsibility to the American people, removing any doubt to whether the SEC and the Commodities Futures Trading Commission are empowered to investigate and prosecute cases involving trading of securities. For additional teeth, the legislation also directs the Congressional Ethics Committees to write rules to enforce this provision. As a result, the legislation would empower the Ethics Committees, as well as the SEC, to enforce rules against insider trading by members of Congress and Congressional staff, but would not require the 67 vote threshold required to directly amend Senate rules in mid-session.
For added transparency, the legislation further enhances disclosure requirements by requiring that members of Congress report stock and other major financial transactions within 30 days, dramatically less than the current annual reporting requirement, and reduced from the 90 days proposed in the original draft of the legislation. Under the legislation, these reports and other financial disclosures must be posted online.
The STOCK Act is supported by at least seven government reform groups including: Campaign Legal Center, Citizens for Responsibility and Ethics in Washington, Common Cause, Democracy 21, Public Citizen, Sunlight Foundation and U.S. PIRG.