On Wednesday, President Obama signed the STOCK Act into law. The acronym stands for Stop Trading on Congressional Knowledge Act.
The act bars members of Congress, executive branch employees and judicial employees from profiting off nonpublic information gleaned on the job, according to a statement from the White House press secretary on Wednesday.
In his remarks at the signing, President Obama said:
The STOCK Act makes it clear that if members of Congress use nonpublic information to gain an unfair advantage in the market, then they are breaking the law. It creates new disclosure requirements and new measures of accountability and transparency for thousands of federal employees. That is a good and necessary thing. We were sent here to serve the American people and look out for their interests -- not to look out for our own interests.
Obviously, without the clarity provided by this law, it was unclear that elected officials were there to look out for the interests of their constituents instead of stuffing cash into their pockets at every opportunity. While giggling maniacally, we can only imagine.
In reporting on the STOCK Act, the Washington Times story, "Obama signs ban on insider trading in Congress," recounted the precipitating incident that pushed the bill, first introduced way back in 2006, into actuality.
" … The bill languished until the "60 Minutes" report in November (2011) profiled several members who apparently used their positions to enrich themselves by trading stock based on private information and decisions that in many instances -- such as real estate deals near federal highway projects -- they controlled," the Washington Times reported.
Here's the nitty-gritty from the White House fact sheet on the new law. The STOCK Act:
- Expressly affirms that Members of Congress and staff are not exempt from the insider trading prohibitions of federal securities laws.
- Gives House and Senate ethics committees authority to implement additional ethics rules.
- Amends the Ethics in Government Act of 1978 to require a government-wide shift to electronic reporting and online availability of public financial disclosure information.
- Requires that Members of Congress and government employees report certain investment transactions within 45 days after a trade.
- Mandates that the information in public financial disclosure reports (currently made available on request) be made available on agency websites and ultimately through searchable, sortable databases.
- Requires forfeiture of federal pension if a Member of Congress commits one of several corruption offenses while serving as an elected official. Current law forfeits a Member’s pension for conviction of offenses committed while serving in Congress. The STOCK Act expands forfeiture to apply to misconduct by Members committed in other federal, state and local elected offices and adds further federal crimes, including insider trading, for which forfeiture will be required.
- Will require Members and certain high level government officials to disclose the terms of personal mortgages.
- Limits participation in IPOs by Members and senior government employees to purchases available to the public generally.
- Requires GAO and CRS to produce a report on the role of political intelligence firms in the financial markets.
- Bars senior executives at Fannie Mae and Freddie Mac from receiving bonuses during any period of conservatorship after enactment.
Snarky asides notwithstanding, the law seems like a decent first step toward ameliorating ethics in the upper echelons of government, though as the President said in his remarks, there's obviously more that can be done.
What do you think?
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