Senate Approves Bill Banning Insider Trading Among Members of Congress
The U.S. Senate voted 93 to 2 on Monday to take up a bill prohibiting members of Congress from trading stocks and other securities on the basis of confidential information they receive as lawmakers.
At a time when the public approval rating of Congress is near record lows, senators on both sides of the aisle recognize the importance of the bill in helping to restore the public’s confidence in lawmakers.
A handful of lawmakers have tried to enact such restrictions for years, but their efforts drew little support until the practice attracted attention last year. Public outcry over elected representatives using their positions of authority to make stock bets prompted a flood of backing for the idea to which President Barack Obama lent his support in his State of the Union address last week.
With national elections around the corner, lawmakers are covering their bases. The bill states that members and employees of Congress are not exempt from the federal law and regulations that ban insider trading.
“No member of Congress and no employee of Congress shall use any nonpublic information derived from the individual’s position as a member of Congress or employee of Congress, or gained from performance of the individual’s duties, for personal benefit,” the bill says.
Current federal securities law does not explicitly exempt members of Congress, but the bill is meant to eliminate any ambiguity about whether and when lawmakers may be found to have violated the law.
The bill would require members of Congress to disclose all purchases or sales of stocks, bonds, commodities futures, and other forms of securities within 30 days of the transactions. The information would then be posted on the Internet for the public.
However, the bill does not prevent lawmakers from “owning stocks in industries they impact,” a rule Obama called on Congress to enact in his State of the Union speech.
More than 250 lawmakers in the House of Representatives, including at least 90 Republicans, have signed up as co-sponsors of a similar bill. A spokesperson for House Majority Leader Eric Cantor (R-Va.) said he “plans to move an expanded version of the Stock Act through the House in February.”
But senior House Republicans first want to expand the bill to prohibit lawmakers from using nonpublic information in real estate transactions as well, while Senator Sheldon Whitehouse (D-R.I.) might try to attach it to other legislation, namely a bill codifying the principle that top earners should pay at least the tax rate of middle-class workers. Whitehouse’s bill creates what would be an alternative minimum tax for the most affluent.
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