House Approves Insider Trading Legislation

Today the House of Representatives approved the Stop Trading on Congressional Knowledge (STOCK) Act to prevent insider trading by Members of Congress and Executive branch officials.  Representative C.W. Bill Young, a cosponsor of the STOCK Act, strongly supported passage of the bill.  

Current securities laws already prohibit insider trading by anyone, including government officials.  House ethics rules explicitly prohibit Members from profiting as a result of information learned as a part of their service.  Additionally, if Members use nonpublic information for trading purposes they would be subject to existing federal criminal insider trading statutes.  

Said Representative Young: “We should leave no doubt in the public’s mind that improper trading is illegal.  I feel that Members of Congress must hold themselves to the highest standard that this office deserves.”

A similar version of the STOCK Act has already passed the Senate.  A Conference Committee between the House and the Senate will now resolve the differences between the two chambers.  

The House-passed version of the STOCK Act strengthens the Senate bill by applying the insider trading restrictions and public disclosure requirements equally to all three branches of the federal government: Legislative, Executive, and Judicial Branch officials and their staff.  

Specifically, the STOCK Act would:

• Amend the Congressional Accountability Act of 1995 and the Ethics in Government Act to make clear that Members of Congress and congressional employees are prohibited from using nonpublic information for private profit and affirm that Members and employees are not exempt from the insider trading prohibition regulations under the Securities Exchange Act of 1934;
• Require Members of Congress, senior Congressional staff, and Senior Executive branch officials to publicly disclose securities transactions within 30 days;
• Prohibit Members of Congress from receiving preferential consideration for initial public offerings of securities;
• Ensure that a Member of Congress or other elected official who commits a crime does not receive a pension;
• Limit bonuses paid to Fannie Mae and Freddie Mac executives;
• Extend the restrictions that apply to Members of Congress on attempts to influence hiring decisions based on political affiliation to the Executive branch; and
• Extend the restrictions and disclosure requirements that apply to Members of Congress on negotiation for future employment to the Executive branch.