Dec. 21, 2011
Buying Insider Trading Information From Congress – and Getting Rich
Congress Must Prohibit ‘Political Intelligence Consultants’ – as Well as Themselves – From Congressional Insider Trading
WASHINGTON, D.C. – Public Citizen today sent a letter urging both the U.S. House of Representatives and the Senate to move forward with the stalled “Stop Trading on Congressional Knowledge” (STOCK) Act in the beginning of the new year and prevent it from being watered down while the legislation languishes.
House Republican leaders, under the direction of House Majority Leader Eric Cantor (R-Va.), have halted progress of the commonsense legislation, which would ban members of Congress, their staffs and others who do business with Congress from trading and profiting on insider information gathered during their official duties. Reps. Timothy Walz (D-Minn.) and Louise Slaughter (D-N.Y.) are the lead proponents of this critical legislation (H.R. 1148), which has 239 co-sponsors and for which support grows daily.
“Rep. Cantor has publicly stated that he pulled the legislation to expand the measure, but the stalling is providing lobbyists and others with precious time to weaken the bills,” said Craig Holman, government affairs lobbyist for Public Citizen.
One key provision that would prohibit “political intelligence consultants” – lobbyists and stock brokers who develop close working relations with those in Congress – from trading on insider information derived from non-public meetings with members and staff is in the process of being stripped from the legislation in the Senate and is being threatened in the House as well.
“Make no mistake: Though no one will admit it, lobbyists and brokers appear to have enjoyed a very profitable relationship with members of Congress, getting them to divulge information about pending legislation that will directly impact the markets, and then trading on that information,” Holman said.
A Wall Street Journal investigative report (Dec. 20, 2011) found that “Seeking advance word of government decisions is part of a growing, lucrative – and legal – practice in Washington that employs a network of brokers, lobbyists and political insiders who arrange private meetings between hedge funds and officials, including lawmakers and their aides. … News tips, combined with data and analysis, help steer firms to profitable investment decision.”
“Mr. Cantor, insider trading is illegal for the rest of America,” said Holman. “It should be illegal for you and your friends as well. Let the STOCK Act, unweakened and unadulterated, move forward.”
Public Citizen is a national, nonprofit consumer advocacy organization based in Washington, D.C. for more information, please visit www.citizen.org.