Washington D.C. – U.S. Senator Kirsten Gillibrand (D-NY) commended Senate Homeland Security and Governmental Affairs Committee Chairman Joe Lieberman (I-CT) for continuing to build momentum around her strong bipartisan STOCK Act legislation to close loopholes for any insider trading by lawmakers, their families and staffs. Senator Lieberman has referred to his committee members a newly revised comprehensive measure today which builds on Gillibrand’s initial legislation and will be marked-up by the committee next week. The legislation will make insider trading by members of Congress a clear violation of the law and Congressional rules and require lawmakers to disclose major trades.
Currently, insider trading by members of Congress and their staffs is not clearly prohibited by the Securities Exchange Act or Congressional rules. In addition to revising the statute to enable the Securities and Exchange Commission to prosecute cases of insider trading by members of Congress, like a similar version in the House of Representatives, this legislation would also make it a violation of the rules of the House and Senate to engage in such an activity. This creates more accountability so that anyone who uses their role as a member of Congress to enrich themselves would be answerable not only to the Department of Justice and the Securities and Exchange Commission, but also to Congress’s own ethics rules.
“The American people deserve the right to know their lawmakers’ only interest is what’s best for the country, not their 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. “Members of Congress should not have a different set of rules – they should be treated the same as everyone else. This is not a Democratic or Republican idea – it is a common sense idea gaining momentum every day with bipartisan support. I thank Chairman Lieberman and the committee for their leadership in swiftly moving this legislation forward. I look forward to continuing to work with the committee and Senator Brown in passing this needed measure to increase government transparency and accountability.”
The newly revised version of the STOCK Act explicitly bars a member of Congress from engaging in insider trading or otherwise using nonpublic information for their own personal benefit, and clarifies that this provision constitutes a sufficient basis for the Securities and Exchange Commission to investigate and prosecute members of Congress engaging in insider trading – including the “tipping” of non-public information. By incorporating feedback from witnesses at last week’s 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, and their staff are fully covered by it.
In addition, the revised 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.
Lastly, 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.