June 29, 2017
STOCK Act Has Dramatically Curtailed Stock Trading Activity by U.S. Senators
But Prospects for Congressional Insider Trading and Conflicts of Interest Persist
WASHINGTON, D.C. – While the STOCK Act has dramatically curtailed overall stock trading activity by U.S. senators, many remain active players in the market and frequently trade in corporations they oversee in their official capacity, a new Public Citizen report shows.
“This is good news and bad news,” said Craig Holman, government affairs lobbyist for Public Citizen’s Congress Watch division. “With less overall trading activity by Congress, the opportunities for self-dealing have declined. But those who continue playing in the market are often trading in businesses they oversee and, in some cases, have even sponsored legislation that could impact their investments.”
The STOCK Act, passed in 2012, was designed to curtail the use by lawmakers and staff of information not publicly available to trade stocks. A year later, lawmakers repealed a key portion of the law that required disclosure of congressional stock activity.
Public Citizen’s study found that the financial value of stock trades of U.S. Senate members has decreased 66 percent before and after passage of the STOCK Act. Additionally, the number of stock transactions has dropped about 68 percent.
Nevertheless, conflicts of interest remain prevalent among those who continue to be active players in the financial markets. Many senators are trading in businesses their congressional committees oversee, some trade in companies with which they have an ongoing business relationship and others have introduced legislation that could have an immediate and direct impact on the value of their personal stocks.
“To reduce these conflicts of interest, members of Congress, just like senior executive branch employees, should be required to avoid trading in businesses that they directly oversee in their official capacity,” said Lisa Gilbert, vice president of legislative affairs for Public Citizen.
The report also recommends that Congress reestablish the searchable, sortable and downloadable disclosure regime of congressional trading activity that Congress repealed one year after passage of the STOCK Act. The report also recommends peeling back the covers that cloak the “political intelligence industry” – Wall Street operatives who roam the halls of Congress in search of valuable information to sell on the stock market.