Last updated on: 4/4/2012 10:59:08 AM PST | Author: ProCon.org
What is the Stop Trading on Congressional Knowledge (STOCK) Act?
The Stop Trading on Congressional Knowledge (STOCK) Act prohibits members and employees of Congress from using "any nonpublic information derived from the individual's position… or gained from performance of the individual's duties, for personal benefit.” The bill also applies to all employees in the Executive and Judicial branches of the federal government. The STOCK Act requires a one-year 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.
The US House of Representatives Ethics Manual states that its members should "never use any information coming to him confidentially in the performance of governmental duties as a means for making private profit," and the Senate Ethics Manual states that its Conflict of Interest Rule 37(1) provides for "a broad prohibition against members, officers or employees deriving financial benefit, directly or indirectly, from the use of their official position[s].” No arrests or prosecutions, however, have ever been made against members of Congress for insider trading based on nonpublic congressional knowledge.
While Members of Congress are not exempt from federal securities laws (including insider trading prohibitions), it remains unclear whether a member of Congress has a fiduciary duty to the United States (misappropriating information gained through an employment relationship is illegal, but case law conflicts as to whether members of Congress actually constitute "employees” of the federal government), whether the information on which the Member trades is "material” (Is there "a substantial likelihood” that a reasonable investor "would consider it important” in making an investment decision?), and whether the information on which the member traded is "nonpublic.”
The STOCK Act was originally introduced in the 109th session of the House of Representatives on Mar. 28, 2006 by Brian Baird (D-WA) and Louise Slaughter (D-NY) where it died in committee. It was reintroduced in the 110th (May 16, 2007) and 111th (Jan. 26, 2009) House sessions where it also died in committee.
On Mar. 17, 2011, Tim Walz (D-MN) introduced the STOCK Act into the 112th House session where it gained one co-sponsor and was referred to various committees. Eight more co-sponsors joined by Nov. 4, 2011.
On Nov. 13, 2011, 60 Minutes reported that several members of Congress allegedly used insider information for personal gain. The STOCK Act received 84 additional House co-sponsors in the five days following the report, and Scott Brown (R-MA) filed the STOCK Act in the Senate on Nov. 15, 2011. Kirsten Gillibrand (D-NY) also filed a variation of the STOCK Act in the Senate on Nov. 17, 2011.
On Dec. 6, 2011, House Financial Services Chairman Spencer Bachus (R-AL) scheduled a markup of the STOCK Act for Dec. 14, 2011. House Majority Leader Eric Cantor (R-VA) indefinitely postponed the markup session on Dec. 7, 2011, stating that "a large group of bipartisan members of the committee felt the legislation was flawed and being recklessly moved solely in response to media pressure. Members of both sides of the aisle wanted more time to gather information and develop appropriate alternatives.” Congressman Walter Jones (R-NC) described Cantor’s move as "absolutely unacceptable” and "petty,” while Congresswoman Louise Slaughter (D-NY) stated that "last week we passed a bill worth hundreds of billions of dollars with less than a two day layover and no one knew what was in it. This bill has been around for six years.”
On Jan. 24, 2012, in his State of the Union Address, President Obama said "Send me a bill that bans insider trading by members of Congress, and I will sign it tomorrow.” Immediately after the speech, Senate Majority Leader Harry Reid (D-NV) told reporters, "I think people should have enough sense not to do it [insider trading] without legislation, but I will support legislation.” On Feb. 2, 2012, a revised version of the STOCK Act passed in the Senate by a vote of 96-3 with Senators Richard Burr (R-NC), Tom Coburn (R-OK), and Jeff Bingaman (D-NM) dissenting. On Feb. 9, 2012, the STOCK Act passed in the House by a vote of 417-2 with Representatives John Campbell (R-CA) and Rob Woodall (R-GA) dissenting. On
Mar. 22, 2012, the Senate unanimously consented to the House version of the
Apr. 4, 2012 - Signed into law by President Obama.
Mar. 28, 2012 - Presented to President Obama.
Mar. 22, 2012 - House version of S 2038 passed Senate by unanimous consent.
Mar. 20, 2012 - Senate Majority Leader Harry Reid filed cloture on the House version of S 2038.
Feb. 9, 2012 - Passed House by a Yea-Nay Vote of 417-2.
Feb. 2, 2012 - Passed Senate by a Yea-Nay Vote of 96-3.
Jan. 31, 2012 - Congressional Budget Office (CBO) Cost Estimate (21 KB) submitted to the Senate Committee on Homeland Security and Governmental Affairs.
Jan. 30, 2012 - Cloture invoked in Senate by a Yea-Nay vote of 93-2. Proposed amendments 1470-1476 (322 KB). Proposed amendments 1477-1495 (484 KB) Jan. 26, 2012 - Motion to proceed to consideration of measure made in Senate.
Jan. 26, 2012 - Read twice and placed on Senate Legislative Calendar under General Orders. S 2038 is a marked-up and reconciled version of S 1871 and S 1903.
"Amends the Securities Exchange Act of 1934 and the Commodity Exchange Act to direct both the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) to prohibit purchase or sale of either securities, security-based swaps, or commodities for future delivery or swap by a person in possession of material nonpublic information regarding pending or prospective legislative action if the information was obtained: (1) knowingly from a Member or employee of Congress, (2) by reason of being a Member or employee of Congress, or (3) from other federal employees and derived from their federal employment. Makes it an element of the prohibited activity, also, that the Member or employee of Congress or the federal employee acted with the intent to assist another person, directly or indirectly, to use the information to buy or sell the securities of such publicly traded company based on such information. Amends the Standing Rules of the Senate to prohibit a Member, officer, or employee of the Senate from disclosing material nonpublic information relating to any pending or prospective legislative action relating to any publicly-traded company or to any commodity if such person acts with intent to assist another person, directly or indirectly, to use the information to buy or sell the securities of that publicly traded company based on such information. Amends the Ethics in Government Act of 1978 to require formal disclosure of certain securities and commodities futures transactions to either the Clerk of the House of Representatives or the Secretary of the Senate. Amends the Lobbying Disclosure Act of 1995 to subject to its registration, reporting, and disclosure requirements, as well as requirements for identification of clients and covered legislative and executive officials, all political intelligence activities, contacts, firms, and consultants. Requires the Comptroller General to include political intelligence activities, contacts, firms, and consultants in its annual compliance audits and reports."
Kirsten Gillibrand (D-NY)
Co-sponsors (24 D, 4 R, 1 I)
Max Baucus (D-MT), Richard Blumenthal (D-IL), Barbara Boxer (D-CA), Sherrod Brown (D-OH), Benjamin Cardin (D-MD), Robert Casey, Jr. (D-PA), Richard Durbin (D-IL), Dianne Feinstein (D-CA), Kay Hagan (D-NC), Thomas Harkin (D-IA), Mike Johanns (R-NE), Tim Johnson (D-SD), John Kerry (D-MA), Amy Klobuchar (D-MN), Herbert Kohl (D-WI), Frank Lautenberg (D-NJ), Patrick Leahy (D-VT), Claire McCaskill (D-MO), Robert Menendez (D-NJ), Barbara Mikulski (D-MD), Bill Nelson (D-FL), John Reed (D-RI), Marco Rubio (R-FL), Bernard Sanders (I-VT), Olympia Snowe (R-ME), Debbie Ann Stabenow (D-MI), Jon Tester (D-MT), John Thune (R-SD), Sheldon Whitehouse (D-RI)
Roy Blunt (R-MO), Saxby Chambliss (R-GA), Susan Collins (R-ME), Dean Heller (R-NV), Mike Johanns (R-NE), Mark Kirk (R-IL), Marco Rubio (R-FL), Olympia Snowe (R-ME)
Dec. 13, 2011 - Advanced in a vote of 7-2 by the Senate Homeland Security and Governmental Affairs Committee.
Dec. 1, 2011 - Hearing titled "Insider Trading and Congressional Accountability"held by the Senate Homeland Security and Governmental Affairs Committee. See S1903 for testimony.
Nov. 15, 2011 - Read twice and referred to the Senate Homeland Security and Governmental Affairs Committee.
"Amends the Securities Exchange Act of 1934 and the Commodity Exchange Act to direct both the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) to prohibit purchase or sale of either securities, security-based swaps, or commodities for future delivery or swap by a person in possession of material nonpublic information regarding pending or prospective legislative action if the information was obtained: (1) knowingly from a Member or employee of Congress, (2) by reason of being a Member or employee of Congress, and (3) other federal employees. Amends the Code of Official Conduct of the Rules of the House of Representatives to prohibit certain House personnel from disclosing material nonpublic information relating to any pending or prospective legislative action relating to either securities of a publicly-traded company or a commodity if such personnel has reason to believe that the information will be used to buy or sell the securities or commodity based on such information. Directs both the Committee on Agriculture and the Committee on Financial Services of the House of Representatives to hold hearings on the implementation by the CFTC and the SEC of such financial transaction prohibitions. Amends the Ethics in Government Act of 1978 to require formal disclosure of certain securities and commodities futures transactions to either the Clerk of the House of Representatives or the Secretary of the Senate. Amends the Lobbying Disclosure Act of 1995 to subject to its registration, reporting, and disclosure requirements, as well as requirements for identification of clients and covered legislative and executive officials, all political intelligence activities, contacts, firms, and consultants. Requires the Comptroller General to include political intelligence activities, contacts, firms, and consultants in its annual compliance audits and reports."
Timothy J. Walz (D-MN)
Co-sponsors (188 D, 97 R)
Gary Ackerman (D-NY), Todd Akin (R-MO), Rodney Alexander (R-LA), Jason Altmire (D-PA), Mark Amodei (R-NV), Robert Andrews (D-NJ), Joe Baca (D-CA), Michele Bachmann (R-MN), Tammy Baldwin (D-WI), John Barrow (D-GA), Roscoe Bartlett (R-MD), Charles Bass (R-NH), Karen Bass (D-CA), Xavier Becerra (D-CA), Rick Berg (R-ND), Shelley Berkley (D-NV), Howard Berman (D-CA), Brian Bilbray (R-CA), Gus Bilirakis (R-FL), Sanford Bishop (D-GA), Timothy Bishop (D-NY), Earl Blumenauer (D-OR), Suzanne Bonamici (D-OR), Madeleine Bordallo (D-GU), Dan Boren (D-OK), Leonard Boswell (D-IA), Charles Boustany (R-LA), Robert Brady (D-PA), Bruce Braley (D-IA), Vern Buchanan (R-FL), Ann Marie Buerkle (R-NY), Michael Burgess (R-TX), George Butterfield (D-NC), Shelley Capito (R-WV), Lois Capps (D-CA), Michael Capuano (D-MA), Dennis Cardoza (D-CA), Russ Carnahan (D-MO), John Carney (D-DE), Andre Carson (D-IN), John Carter (R-TX), Kathy Castor (D-FL), Steven Chabot (R-OH), Ben Chandler (D-KY), Donna Christensen (D-VI), Judy Chu (D-CA), David Cicilline (D-RI), Hansen Clarke (D-MI), William Clay (D-MO), Emanuel Cleaver (D-MO), James Clyburn (D-SC), Howard Coble (R-NC), Mike Coffman (R-CO), Steve Cohen (D-TN), Gerald Connolly (D-VA), John Conyers (D-MI), Jim Cooper (D-TN), Jim Costa (D-CA), Jerry Costello (D-IL), Joe Courtney (D-CT), Rick Crawford (R-AR), Mark Critz (D-PA), Joseph Crowley (D-NY), Henry Cuellar (D-TX), Danny Davis (D-IL), Susan Davis (D-CA), Peter DeFazio (D-OR), Diana DeGette (D-CO), Rosa DeLauro (D-CT), Jeff Denham (R-CA), Charles Dent (R-PA), Scott DesJarlais (R-TN), Ted Deutch (D-FL), Norman Dicks (D-WA), Lloyd Doggett (D-TX), Joe Donnelly (D-IN), Jeff Duncan (R-SC), Donna Edwards (D-MD), Keith Ellison (D-MN), Jo Ann Emerson (R-MO), Eliot Engel (D-NY), Anna Eshoo (D-CA), Eni Faleomavaega (D-AS), Sam Farr (D-CA), Chaka Fattah (D-PA), Bob Filner (D-CA), Michael Fitzpatrick (R-PA), Jeff Flake (R-AZ), Chuck Fleischmann (R-TN), Bill Flores (R-TX), Randy Forbes (R-VA), Jeffrey Fortenberry (R-NE), Barney Frank (D-MA), Rodney Frelinghuysen (R-NJ), Marcia Fudge (D-OH), Elton Gallegly (R-CA), John Garamendi (D-CA), Cory Gardner (R-CO), Jim Gerlach (R-PA), Chris Gibson (R-NY), Charles Gonzalez (D-TX), Paul Gosar (R-AZ), Trey Gowdy (R-SC), Al Green (D-TX), Raymond Green (D-TX), Tim Griffin (R-AR), Raul Grijalva (D-AZ), Frank Guinta (R-NH), Luis Gutiérrez (D-IL), Janice Hahn (D-CA), Colleen Hanabusa (D-HI), Vicky Hartzler (R-MO), Alcee Hastings (D-FL), Joe Heck (R-NV), Martin Heinrich (D-NM), Jaime Herrera Beutler (R-WA), Brian Higgins (D-NY), James Himes (D-CT), Maurice Hinchey (D-NY), Ruben Hinojosa (D-TX), Mazie Hirono (D-HI), Kathleen Hochul (D-NY), Tim Holden (D-PA), Rush Holt (D-NJ), Michael Honda (D-CA), Steny Hoyer (D-MD), Jay Inslee (D-WA), Steve Israel (D-NY), Jesse Jackson (D-IL), Sheila Jackson-Lee (D-TX), Lynn Jenkins (R-KS), Bill Johnson (R-OH), Eddie Johnson (D-TX), Henry Johnson (D-GA), Samuel Johnson (R-TX), Timothy Johnson (R-IL), Walter Jones (R-NC), Jim Jordan (R-OH), Marcy Kaptur (D-OH), William Keating (D-MA), Dale Kildee (D-MI), Ronald Kind (D-WI), Larry Kissell (D-NC), Dennis Kucinich (D-OH), Raul Labrador (R-ID), Leonard Lance (R-NJ), Jeff Landry (R-LA), James Langevin (D-RI), Rick Larsen (D-WA), John Larson (D-CT), Thomas Latham (R-IA), Robert Latta (R-OH), Barbara Lee (D-CA), Sander Levin (D-MI), John Lewis (D-GA), Daniel Lipinski (D-IL), Frank LoBiondo (R-NJ), David Loebsack (D-IA), Zoe Lofgren (D-CA), Billy Long (R-MO), Nita Lowey (D-NY), Blaine Luetkemeyer (R-MO), Stephen Lynch (D-MA), Carolyn Maloney (D-NY), Kenny Marchant (R-TX), Edward Markey (D-MA), Jim Matheson (D-UT), Doris Matsui (D-CA), Carolyn McCarthy (D-NY), Michael McCaul (R-TX), Betty McCollum (D-MN), Thaddeus McCotter (R-MI), James McDermott (D-WA), James McGovern (D-MA), Mike McIntyre (D-NC), Jerry McNerney (D-CA), Patrick Meehan (R-PA), Michael Michaud (D-ME), Bradley Miller (D-NC), Candice Miller (R-MI), George Miller (D-CA), Jeff Miller (R-FL), Gwen Moore (D-WI), James Moran (D-VA), Christopher Murphy (D-CT), Tim Murphy (R-PA), Sue Myrick (R-NC), Jerrold Nadler (D-NY), Grace Napolitano (D-CA), Richard Neal (D-MA), Kristi Noem (R-SD), Eleanor Norton (D-DC), John Olver (D-MA), William Owens (D-NY), Frank Pallone (D-NJ), William Pascrell (D-NJ), Edward Pastor (D-AZ), Erik Paulsen (R-MN), Donald Payne (D-NJ), Ed Perlmutter (D-CO), Gary Peters (D-MI), Collin Peterson (D-MN), Thomas Petri (R-WI), Chellie Pingree (D-ME), Joseph Pitts (R-PA), Todd Platts (R-PA), Ted Poe (R-TX), Jared Polis (D-CO), Bill Posey (R-FL), David Price (D-IL), Mike Quigley (D-IL), Nick Rahall (D-WV), Charles Rangel (D-NY), Dennis Rehberg (R-MT), Dave Reichert (R-WA), Silvestre Reyes (D-TX), Laura Richardson (D-CA), Cedric Richmond (D-LA), Scott Rigell (R-VA), David Rivera (R-FL), Thomas Rooney (R-FL), Ileana Ros-Lehtinen (R-FL), Dennis Ross (R-FL), Mike Ross (D-AR), Steven Rothman (D-NJ), Lucille Roybal-Allard (D-CA), Jon Runyan (R-NJ), Dutch Ruppersberger (D-MD), Timothy Ryan (D-OH), Gregorio Sablan (D-MP), Linda Sanchez (D-CA), Loretta Sanchez (D-CA), John Sarbanes (D-MD), Steve Scalise (R-LA), Janice Schakowsky (D-IL), Adam Schiff (D-CA), Robert Schilling (R-IL), Jean Schmidt (R-OH), Kurt Schrader (D-OR), Allyson Schwartz (D-PA), Austin Scott (R-GA), Robert Scott (D-VA), Tim Scott (R-SC), Jose Serrano (D-NY), Terri Sewell (D-AL), Brad Sherman (D-CA), John Shimkus (R-IL), Heath Shuler (D-NC), Albio Sires (D-NJ), Louise Slaughter (D-NY), Adam Smith (D-WA), Christopher Smith (R-NJ), Jackie Speier (D-CA), Fortney Stark (D-CA), Clifford Stearns (R-FL), Betty Sutton (D-OH), Bennie Thompson (D-MS), Michael Thompson (D-CA), John Tierney (D-MA), Scott Tipton (R-CO), Paul Tonko (D-NY), Edolphus Towns (D-NY), Niki Tsongas (D-MA), Robert Turner (R-NY), Frederick Upton (R-MI), Christopher Van Hollen (D-MD), Nydia Velazquez (D-NY), Peter Visclosky (D-IN), Timothy Walberg (R-MI), Joe Walsh (R-IL), Debbie Wasserman Schultz (D-FL), Maxine Waters (D-CA), Henry Waxman (D-CA), Peter Welch (D-VT), Allen West (R-FL), Addison Wilson (R-SC), Frederica Wilson (D-FL), Rob Wittman (R-VA), Frank Wolf (R-VA), Lynn Woolsey (D-CA), John Yarmuth (D-KY), Kevin Yoder (R-KS), Bill Young (R-FL), Todd Young (R-IN), Pedro Pierluisi (D-PR)
Brad Ellsworth (D-IN), Raul Grijalva (D-AZ), Paul Hodes (D-NH), Dennis Kucinich (D-OH), Carolyn Maloney (D-NY), Louise Slaughter (D-NY), Jackie Speier (D-CA), Michael Thompson (D-CA), Niki Tsongas (D-MA), Timothy J. Walz (D-MN)
Jan. 26, 2009 - Referred to the House Agriculture, Administration, Financial Services, Judiciary, Rules, and Standards of Official Conduct committees.
Apr. 23, 2009 - Referred to the House Agriculture Subcommittee on General Farm Commodities and Risk Management.
June 12, 2009 - Referred to the House Judiciary Subcommittee on Constitution, Civil Rights, and Civil Liberties. July 13, 2009 - Hearing titled "Preventing Unfair Trading by Government Officials"(3.75 MB)held by the Subcommittee on Oversight and Investigations. Died in committee.
André Carson (D-IN), Earl Blumenauer (D-OR), Dan Boren (D-OK), Raul Grijalva (D-AZ), Dennis Kucinich (D-OH), Tim Mahoney (D-FL), Christopher Shays (R-CT), Albio Sires (D-NJ), Louise Slaughter (D-NY), Timothy J. Walz (D-MN)
May 16, 2007 - Referred to the House Agriculture, Administration, Financial Services, Judiciary, and Standards of Official Conduct committees.
June 25, 2007 - Referred to the House Judiciary Subcommittee on Constitution, Civil Rights, and Civil Liberties.
June 26, 2007 - Referred to the House Agriculture Subcommittee on General Farm Commodities and Risk Management. Died in committee.
Earl Blumenauer (D-OR), Jim Cooper (D-TN), Rahm Emanuel (D-IL), Barton Gordon (D-TN), Raul Grijalva (D-AZ), Rush Holt (D-NJ), Eddie Johnson (D-TX), Timothy Johnson (R-IL), John Larson (D-CT), Carolyn Maloney (D-NY), Dennis Moore (D-KS), Christopher Shays (R-CT), Louise Slaughter (D-NY), Mark Udall (D-CO)
Mar. 28, 2006 - Referred to the House Administration, Agriculture, Financial Services, and Judiciary committees. Died in committee.