Dec. 1, 2011
Reform Groups Urge Congress to Prohibit ‘Congressional Insider Trading’
Senate Committee on Homeland Security Debating Fate of Two Measures Today
WASHINGTON, D.C. – Half a dozen reform groups sent a letter today urging the U.S. Senate Committee on Homeland Security and Government Affairs to join in the legislative drive to pass the “Stop Trading on Congressional Knowledge” (STOCK) Act. The committee is holding a hearing today on two separate but similar measures introduced by Sens. Kirsten Gillibrand (D-N.Y.) and Scott Brown (R-Mass.), with a combined total of 16 co-sponsors. The measures would prohibit members of Congress and their staffs from using information gleaned in the course of their official duties for insider trading in the stock market.
The Campaign Legal Center, Common Cause, Democracy 21, Public Citizen, Sunlight Foundation and U.S. PIRG sent a statement to the committee expressing dismay that congressional insider trading is not already clearly illegal and encouraging passage of the STOCK Act.
“Under current law, ‘insider trading’ is defined as the buying or selling of securities or commodities based on non-public information in violation of confidentiality – either to the issuing company or the source of information,” the letter said. “Congressional officials and employees in the course of official business, it is often believed, do not owe a duty of confidentiality to these companies and thus are not liable for insider trading. … We encourage all members of the Senate to join in a bipartisan effort to apply the insider trading laws uniformly across Congress before any new scandals may arise.”
Public Citizen submitted additional testimony to the committee in support of the STOCK Act, urging the committee to adopt and send the measure to a floor vote of the full Senate.
“The STOCK Act is a legislative imperative,” said Craig Holman, government affairs lobbyist for Public Citizen. “We know many senators are active traders in the market, and they enjoy a 12 percent higher rate of return on their investments than the market. Either these senators are geniuses when it comes to stock trading, or they know something the rest of us don’t – and trade on it.”
The STOCK Act would clearly and unambiguously make congressional insider trading illegal. It also would require members, staff and others who work with Congress to provide nearly real-time disclosure of their trading activity.
“A small handful of scholars believe that the insider trading law already covers Congress,” said Holman. “But confusion and disagreement reign on the point and, to my knowledge, no enforcement action has ever been taken against congressional insider trading.”
Public Citizen is a national, nonprofit consumer advocacy organization based in Washington, D.C. For more information, please visit www.citizen.org.