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Stop Members of Congress from Insider Trading

Guest Goose

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The other Ron is very wrong. Congress got out of the market before the American public knew about it. Look at Chairman Spencer Bachus or Speaker Boehner's financial records.


All legislators should have their stock funds in blind trusts.


All Real Estate deals should not be permitted until the legislators are out of public office.

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Guest Tea Party Patriot

From what I see, Nancy Pelosi was the worst of them. Looks like Sarah Palin is getting really serious about taking down “crony corporate capitalism” and rooting out the Washington corruption.


My favorite publication let Gov. Palin write an editorial.




Mark Twain famously wrote, "There is no distinctly native American criminal class except Congress." Peter Schweizer's new book, "Throw Them All Out," reveals this permanent political class in all its arrogant glory. (Full disclosure: Mr. Schweizer is employed by my political action committee as a foreign-policy adviser.)


Mr. Schweizer answers the questions so many of us have asked. I addressed this in a speech in Iowa last Labor Day weekend. How do politicians who arrive in Washington, D.C. as men and women of modest means leave as millionaires? How do they miraculously accumulate wealth at a rate faster than the rest of us? How do politicians' stock portfolios outperform even the best hedge-fund managers'? I answered the question in that speech: Politicians derive power from the authority of their office and their access to our tax dollars, and they use that power to enrich and shield themselves.


The money-making opportunities for politicians are myriad, and Mr. Schweizer details the most lucrative methods: accepting sweetheart gifts of IPO stock from companies seeking to influence legislation, practicing insider trading with nonpublic government information, earmarking projects that benefit personal real estate holdings, and even subtly extorting campaign donations through the threat of legislation unfavorable to an industry. The list goes on and on, and it's sickening.


Astonishingly, none of this is technically illegal, at least not for Congress. Members of Congress exempt themselves from the laws they apply to the rest of us. That includes laws that protect whistleblowers (nothing prevents members of Congress from retaliating against staffers who shine light on corruption) and Freedom of Information Act requests (it's easier to get classified documents from the CIA than from a congressional office). The corruption isn't confined to one political party or just a few bad apples. It's an endemic problem encompassing leadership on both sides of the aisle. It's an entire system of public servants feathering their own nests.


None of this surprises me. I've been fighting this type of corruption and cronyism my entire political career. For years Alaskans suspected that our lawmakers and state administrators were in the pockets of the big oil companies to the detriment of ordinary Alaskans. We knew we were being taken for a ride, but it took FBI wiretaps to finally capture lawmakers in the act of selling their votes. In the wake of politicos being carted off to prison, my administration enacted reforms based on transparency and accountability to prevent this from happening again.


We were successful because we had the righteous indignation of Alaskan citizens on our side. Our good ol' boy political class in Juneau was definitely not with us. Business was good for them, so why would they want to end "business as usual"?


The moment you threaten to strip politicians of their legal graft, they'll moan that they can't govern effectively without it. Perhaps they'll gravitate toward reform, but often their idea of reform is to limit the right of "We the people" to exercise our freedom of speech in the political process.


I've learned from local, state and national political experience that the only solution to entrenched corruption is sudden and relentless reform. Sudden because our permanent political class is adept at changing the subject to divert the public's attention—and we can no longer afford to be indifferent to this system of graft when our country is going bankrupt. Reform must be relentless because fighting corruption is like a game of whack-a-mole. You knock it down in one area only to see it pop up in another.


What are the solutions? We need reform that provides real transparency. Congress should be subject to the Freedom of Information Act like everyone else. We need more detailed financial disclosure reports, and members should submit reports much more often than once a year. All stock transactions above $5,000 should be disclosed within five days.


We need equality under the law. From now on, laws that apply to the private sector must apply to Congress, including whistleblower, conflict-of-interest and insider-trading laws. Trading on nonpublic government information should be illegal both for those who pass on the information and those who trade on it. (This should close the loophole of the blind trusts that aren't really blind because they're managed by family members or friends.)

No more sweetheart land deals with campaign contributors. No gifts of IPO shares. No trading of stocks related to committee assignments. No earmarks where the congressman receives a direct benefit. No accepting campaign contributions while Congress is in session. No lobbyists as family members, and no transitioning into a lobbying career after leaving office. No more revolving door, ever.


This call for real reform must transcend political parties. The grass-roots movements of the right and the left should embrace this. The tea party's mission has always been opposition to waste and crony capitalism, and the Occupy protesters must realize that Washington politicians have been "Occupying Wall Street" long before anyone pitched a tent in Zuccotti Park.

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The Homeland Security and Governmental Affairs Committee plans to produce legislation that clearly prohibits Members of Congress from insider trading.


At a hearing called to examine legislative fixes to current laws governing insider trading by members of Congress and their staffs, Chairman Joe Lieberman, ID-Conn., said he hoped to pass a bill out of Committee before Congress adjourns for the Christmas holidays.


“Perceptions are important in public service,” Lieberman said. “If the law seems to allow members of Congress to take advantage of their public position for personal gain, the trust that needs to exist between the American people and our government will be further corroded than it already is. “Since the applicable case law on insider trading for members of Congress is ambiguous, we should specifically proscribe it, so that members of Congress and their staffs do not make investments based on information they obtain as part of their jobs that is not available to the public.”


Ranking Member Susan Collins, R-Maine, said: “Recent press reports on “60 Minutes” and elsewhere demonstrate why we must explore the application of existing laws to Congress, and what actions may need to be taken to close possible loopholes that undermine the public’s confidence in this institution. “Elected office is a place for public service, not personal gain. As demonstrated by the recent press stories, however, there are questions about whether lawmakers have been exempt – legally or practically – from the reach of our laws governing insider trading.”


The hearing was called after a 60 Minutes report on insider trading among members of Congress, which implied that Congress had exempted itself from laws governing insider trading.


In fact, no law specifically prohibits insider trading by anyone, including members of Congress.


All investigations and prosecutions of insider trading are carried out based on broad anti-fraud provisions of the Securities Exchange Act of 1934.


The rules against insider trading encompass corporate insiders and others who have bought and sold securities based on “material, nonpublic information” they obtained and used in violation of a duty of trust. The ambiguity arises because some argue that courts might hold that members of Congress do not have the necessary fiduciary duty to the institution of Congress.


“Whether or not it is clear and conclusive that the SEC can act against members of Congress under its existing authority, there ought to be a law that explicitly deters such unethical behavior by members of Congress and punishes it when it happens,” Lieberman said.


Witnesses at the hearing included Senators Kirsten Gillibrand, D-N.Y., and Scott Brown, R-Mass., the authors of separate insider trading bills. Other witnesses were: Melanie Sloan, Executive Director of Citizens for Responsibility and Ethics in Washington; Donna M. Nagy, the C. Ben Dutton Professor of Law at the Indiana University Maurer School of Law; Donald Langevoort, the Thomas Aquinas Professor of Law at Georgetown University Law Center; John Coffee, Jr., the Adolf A. Berle Professor of Law at Columbia Law School; and Robert Walker, former Staff Director for both the House and Senate Ethics Committees.

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STOCK Act -- Stop Trading On Congressional Knowledge.


The STOCK Act was scheduled to come up for action in House Financial Services this Wednesday, December 14. But late last week, reports surfaced indicating that House Majority Leader Eric Cantor (R-VA) is working behind the scenes to block it. Why. Because he is too closely connected to Goldman Sachs. We need to get this crook out of office.


A majority of lawmakers (222 as of this morning) expressed their support by joining as co-sponsors of this important bill.

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Guest Motley

As an individual investor, and a member of The Motley Fool, I am writing to register my support for H.R. 1148, the "Stop Trading on Congressional Knowledge Act" (STOCK Act.)


For years, academic and journalistic analyses have described the significant outperformance of members of the House and Senate, including their staffers and family members, when investing in the stock market. In some cases, members of Congress have been clocked at 12% annual outperformance of the S&P 500. (Warren Buffett, during his tenure as head of Berkshire Hathaway, only managed 10.8%.)


Such investing success seems extreme. It raises suspicions that our legislators, elected to do the People's business, are in fact trading on their non-public knowledge of laws in progress and planned. This gives them the ability to achieve investing returns beyond those ordinarily achievable by the lay investor. While such action does not currently violate any laws, it should.


Pass the STOCK Act now, and it will.


THOMAS - Bill Summary and Status - H.R.1148 - http://hdl.loc.gov/loc.uscongress/legislation.112hr1148

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Today, Congressman Walz called on Republican Leader Eric Cantor to stop the political games and end his blockade to the STOCK Act. He released the following statement:


“I applaud the United States Senate for doing the right thing and moving the STOCK Act forward,” said Walz. “It is now time for Republican Leader Cantor to do the right thing and end his blockade of the STOCK Act in the House. Members of Congress should have to play by the same rules as everyone else. The American people and a majority of the House want the STOCK Act passed, and passed today.”

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Guest BubbaSmedley

Cantor is the most corrupt member of the US Congress.


A Google search on his wife, Diana F. Cantor, will reveal that she is the "bag man" for the Cantor family operations and picks up over one million dollars per year in government graft. Mrs. Cantor is a former hedge fund operator for Goldman Sachs.

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Testimony on “H.R. 1148, the Stop Trading on Congressional Knowledge Act”


by Robert Khuzami

Director, Division of Enforcement,

U.S. Securities and Exchange Commission

Before the Committee on Financial Services of the U.S. House of Representatives

December 6, 2011


Chairman Bachus, Ranking Member Frank, and Members of the Committee:


Thank you for the opportunity to provide testimony on behalf of the U.S. Securities and Exchange Commission on the subject of insider trading.


Insider trading threatens the integrity of our markets, depriving investors of the fundamental fairness of a level playing field. To deter this conduct and to hold accountable those who fail to play by the rules, the detection and prosecution of those who engage in insider trading remains one of the Division of Enforcement’s highest priorities.


My testimony provides a summary of the Division of Enforcement’s recent work in the area of insider trading, an overview of the law of insider trading as developed through our enforcement program and judicial precedent, and a description of how the current law of insider trading applies to securities trading by Members of Congress and their staffs.

Enforcement’s Insider Trading Program


Insider trading has long been a high priority for the Commission. Approximately eight percent of the 650 average annual number of enforcement cases filed by the Commission in the past decade have been for insider trading violations. In the past two years, the Commission has been particularly active in this area. In fiscal year 2010, the SEC brought 53 insider trading cases against 138 individuals and entities, a 43 percent increase in the number of filed cases from the prior fiscal year. This past fiscal year, the Commission filed 57 actions against 124 individuals and entities, a nearly 8 percent increase over the number of filed cases in fiscal year 2010.


The increased number of insider trading cases has been matched by an increase in the quality and significance of our recent cases. In fiscal year 2011 and the early part of fiscal year 2012, the SEC obtained judgments in 18 actions arising out of its investigation of Galleon hedge fund founder Raj Rajaratnam, including a record $92.8 million civil penalty against Rajaratnam personally. The SEC also discovered and developed information that ultimately led to criminal convictions of Rajaratnam and others, including corporate executives and hedge fund managers, for rampant insider trading. In addition, we recently filed an insider trading action against Rajat Gupta, a former director of both Goldman Sachs and Procter & Gamble, whom we allege provided confidential Board information about both companies’ quarterly earnings and about an impending $5 billion Berkshire Hathaway investment in Goldman Sachs to Rajaratnam, who traded on that information.


Among others charged in SEC insider trading cases in the past fiscal year were various hedge fund managers and traders involved in a $30 million expert networking trading scheme, a former Nasdaq Managing Director, a former Major League Baseball player, a Food and Drug Administration chemist, and a former corporate attorney and a Wall Street trader who traded in advance of mergers involving clients of the attorney’s law firm. The SEC also brought insider trading cases charging a Goldman Sachs employee and his father with trading on confidential information learned by the employee on the firm’s ETF desk, and charging a corporate board member of a major energy company and his son for trading on confidential information about the impending takeover of the company.


The Division also has targeted non-traditional cases involving the misuse or mishandling of material, non-public information. This past fiscal year, the Commission charged Merrill Lynch, Pierce, Fenner & Smith with fraud for improperly accessing and misusing customer order information for the firm’s own benefit. The Commission also censured broker-dealer Janney Montgomery Scott LLC for failing to enforce its own policies and procedures designed to prevent the misuse of material, nonpublic information. Charles Schwab Investment Management was charged for failing to have appropriate information barriers for nonpublic and potentially material information concerning an ultra-short bond fund that suffered significant declines during the financial crises. This deficiency gave other Schwab-related funds an unfair advantage over other investors by allowing the funds to redeem their own investments in the ultra short-bond fund during its decline. The Commission also charged Office Depot, Inc. and two of its executives for violating Regulation FD by selectively disclosing to certain analysts and institutional investors that the company would not meet its earnings.


To respond to emerging risks, the Enforcement Division has developed several new initiatives targeted at ferreting out insider trading, which have enhanced our effectiveness in this area. During our recent reorganization, the Division established a Market Abuse Unit, with an emphasis on various abusive market strategies and practices, including complex insider trading schemes.


The Market Abuse Unit has spearheaded the Division’s Automated Bluesheet Analysis Project, an innovative investigative tool that utilizes the “bluesheet” database of more than one billion electronic equities and options trading records obtained by the Commission in the course of insider trading investigations over the past 20 years. Using newly developed templates, Enforcement staff are able to search across this database to recognize suspicious trading patterns and identify relationships and connections among multiple traders and across multiple securities, generating significant enforcement leads and investigative entry points. While still in its early stages of development, this new data analytic approach already has led to significant insider trading enforcement actions that were not the subject of an SRO referral, informant tip, investor complaint, media report, or other external source.2


As part of the reorganization, the Division also established a cooperation program to encourage key fact witnesses to provide valuable information. Insider trading investigations are extremely fact-intensive. Enforcement staff undertake the often painstaking work of collecting and analyzing trading data across equity and options markets, analyzing communications (email, telephone calls and instant messages, among others) and analyzing market-moving events (e.g., announcements of corporate earnings, product development, and acquisitions and mergers) to identify persons who may have engaged in insider trading or who may have information about such activity. Our new cooperation program is a valuable tool that can help us break open an insider trading investigation earlier in the process, thereby preserving resources. We are already seeing the effectiveness of the cooperation program in our insider trading cases and expect this trend to continue as more cooperators come forward in our investigations.


With an aggressive investigative approach that includes early coordination with the FBI, Department of Justice, and other law enforcement agencies, we have been able to identify potential cooperators who may assist criminal authorities with their covert investigative techniques, helping amass critical evidence in numerous insider trading investigations. Our work with certain SROs has provided valuable early tips, helping us mitigate the harm from insider trading schemes by freezing the illicit proceeds before funds are moved to offshore jurisdictions.


Law of Insider Trading


There is no express statutory definition of the offense of insider trading in securities. The SEC prosecutes insider trading under the general antifraud provisions of the Federal securities laws, most commonly Section 10( b ) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rule 10b-5, a broad anti-fraud rule promulgated by the SEC under Section 10( b ). Section 10( b ) declares it unlawful “[ t ]o use or employ, in connection with the purchase or sale of any security . . . any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors.” Rule 10b-5 broadly prohibits fraud and deception in connection with the purchase and sale of securities. As the Supreme Court has stated, “Section 10( b ) and Rule 10b-5 prohibit all fraudulent schemes in connection with the purchase or sale of securities, whether the artifices employed involve a garden type variety of fraud, or present a unique form of deception,” because “[n]ovel or atypical methods should not provide immunity from the securities laws.


There are two principal theories under which the SEC prosecutes insider trading cases under Section 10( b ) and Rule 10b-5. The “classical theory” applies to corporate insiders — officers, directors, and employees of a corporation, as well as “temporary” insiders, such as attorneys, accountants, and consultants to the corporation. Under the “classical theory” of insider trading liability, a corporate insider violates Section 10( b ) and Rule 10b-5 when he or she trades in the securities of the corporation on the basis of material, nonpublic information. Trading on such information qualifies as a “deceptive device” under Section 10( b ), because “a relationship of trust and confidence [exists] between the shareholders of a corporation and those insiders who have obtained confidential information by reason of their position with that corporation.” That relationship “gives rise to a duty to disclose [or to abstain from trading] because of the ‘necessity of preventing a corporate insider from . . . tak[ing] unfair advantage of . . . uninformed . . . stockholders.’


The Supreme Court has recognized that corporate “outsiders” can also be liable for insider trading under the “misappropriation theory.” Under this theory, a person commits fraud “in connection with” a securities transaction, and thereby violates Section 10( b ) and Rule 10b-5, when he or she misappropriates confidential and material information for securities trading purposes, in breach of a duty owed to the source of the information. This is because “a fiduciary’s undisclosed, self-serving use of a principal’s information to purchase or sell securities, in breach of a duty of loyalty and confidentiality, defrauds the principal of the exclusive use of that information.” The misappropriation theory thus “premises liability on a fiduciary-turned-trader’s deception of those who entrusted him with access to confidential information.”11 Under either the classical or misappropriation theory, a person can also be held liable for “tipping” material, nonpublic information to others who trade, and a “tippee” can be held liable for trading on such information.


A common law principle is that employees owe a fiduciary duty of loyalty and confidence to their employers. In addition, employees often take on contractual duties of trust or confidence as a condition of their employment or by agreeing to comply with a corporate policy. Accordingly, employees have frequently been held liable under the misappropriation theory for trading or tipping on the basis of material non-public information obtained during the course of their employment. This includes prosecution of federal employees who, in breach of a duty to their employer, the federal government, trade or tip on the basis of information they obtained in the course of their employment. For example, the SEC recently brought insider trading charges against a Food and Drug Administration employee alleging that he violated a duty of trust and confidence owed to the federal government under certain governmental rules of conduct when he traded in advance of confidential FDA drug approval announcements.


In light of existing precedent regarding the liability of employees — including federal employees — for insider trading, any statutory changes in this area should be carefully calibrated to ensure that they do not narrow current law and thereby make it more difficult to bring future insider trading actions against any such persons.


Application of Insider Trading Law to Trading by Members of Congress and Their Staff


The general legal principles described above apply to all trading within the scope of Section 10( b ) and Rule 10b-5. There is no reason why trading by Members of Congress or their staff members would be considered “exempt” from the federal securities laws, including the insider trading prohibitions, though the application of these principles to such trading, particularly in the case of Members of Congress, is without direct precedent and may present some unique issues.


Just as in any other insider trading inquiry, there are several fact-intensive questions — including the existence and nature of the duty being breached and both the materiality and nonpublic nature of the information — that would drive the analysis of whether securities trading (or tipping) by a Member of Congress or staff member based on information learned in an official capacity violates Section 10( b ) and Rule 10b-5.


The first question is whether the trading, or communicating the information to someone else, breached a duty owed by the Member or staff. Although there is no direct precedent for Congressional staff, there is case law from other employment contexts regarding misappropriation of information gained through an employment relationship. This precedent is consistent with a claim that Congressional staff, as employees, owe a duty of trust and confidence to their employer and that a Congressional staff member who trades on the basis of material non-public information obtained through his or her employment is potentially liable for insider trading under the misappropriation theory, like any other non-governmental employee.


The question of duty is more novel for Members of Congress. There does not appear to be any case law that addresses the duty of a Member with respect to trading on the basis of information the Member learns in an official capacity. However, in a variety of other contexts, courts have held that “[a] public official stands in a fiduciary relationship with the United States, through those by whom he is appointed or elected.” Commenters have differed on whether securities trading by a Member based on information learned in his or her capacity as a Member of Congress violates the fiduciary duty he or she owes to the United States and its citizens, or to the Federal Government as his or her employer.


Existing Congressional ethics rules also may be relevant to the analysis of duty for both Members and their staff. For example, Paragraph 8 of the Code of Ethics for Government Service provides that “Any person in Government service should . . . [n]ever use any information coming to him confidentially in the performance of governmental duties as a means for making private profit.”


The second question is whether the information on which the Member or staff trades (or tips) is “material” — that is, is there “a substantial likelihood” that a reasonable investor “would consider it important” in making an investment decision? Materiality is a mixed question of fact and law that depends on all the relevant circumstances. In some scenarios, it may be relatively clear that an upcoming Congressional action would be material to a particular issuer or group of issuers, while in others it may be more challenging to establish that.


The third critical question is whether the information on which the Member or staff traded (or tipped) is “nonpublic.” The Commission has stated that “nformation is nonpublic when it has not been disseminated in a manner making it available to investors generally.” Whether information is “nonpublic” would likely depend on the circumstances under which the Member or staff learned the information and the extent to which the information had been disseminated to the public.


As with all issues of liability with regard to insider trading and other claims under Section 10(B), the conduct at issue must be intentional or reckless. Since all of these issues are inherently fact-specific, it is difficult to generalize about the likely outcome of any particular scenario. However, trading by Congressional Members or their staffs is not exempt from the federal securities laws, including the insider trading prohibitions.


Application of Tipper and Tippee Liability Theories to Members of Congress and Their Staff


Communication of nonpublic information to others who either trade on the information themselves or share it with others for securities trading purposes, could be analyzed under the case law relating to tipper and tippee liability and also would turn on the specific facts of the case.


A person can be liable as a tipper where he or she discloses information in breach of a fiduciary duty or other similar duty of trust or confidence and the tippee trades on the basis of that information. The same duty requirement described above is applicable in the tipper context, as are the requirements that the tipped information be nonpublic and material. In addition, a court may require a showing that the Member of Congress or staff member personally benefited from providing the tip.


A person who trades on the basis of material, nonpublic information conveyed by a Member or staff member in breach of a duty also could be liable for illegal insider trading as a tippee. An additional element of liability is that the tippee knew or should have known of the tipper’s breach of duty in disclosing the information.


Investigations into potential trading or tipping by Members of Congress or their staff could pose some unique issues, including those that may arise from the Constitutional privilege provided to Congress under the Speech or Debate Clause, U.S. Const. art. I, § 6, cl.1.23 The Supreme Court has stated that “[t]he Speech or Debate Clause was designed to assure a co-equal branch of the government wide freedom of speech, debate, and deliberation without intimidation or threats from the Executive Branch.” The Clause “protects Members against prosecutions that directly impinge or threaten the legislative process.” While the “heart” of the privilege is speech or debate in Congress, courts have extended the privilege to matters beyond pure speech and debate in certain circumstances.There may be circumstances in which communication of nonpublic information regarding legislative activity to a third party falls “within the ‘sphere of legitimate legislative activity,’” and thus may be protected by the privilege.




The SEC’s continued focus on insider trading and innovative investigative techniques demonstrates our commitment to pursuing potentially suspicious trading in a variety of contexts. While recent innovations in the Division of Enforcement are enhancing our ability to obtain that evidence, to establish liability we must satisfy each of the elements of an insider trading violation, including the materiality of the information, the nonpublic nature of the information, the presence of scienter, and a fiduciary or other duty of trust and confidence that was violated by the trading or tipping. While trading by Members of Congress or their staff is not exempt from the federal securities laws, including the insider trading prohibitions, there are distinct legal and factual issues that may arise in any investigations or prosecutions of such cases. Any statutory changes in this area should be carefully calibrated to ensure that they do not narrow current law and thereby make it more difficult to bring future insider trading actions against individuals outside of Congress.

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Guest Drunk Economist

Just lost a huge amount of respect for Chris Matthews. I guess he is a sellout too. Bummer.



MSNBC's Chris Matthews was really blown away by all the references to insider trading in the President's speech last night! How could Matthews have missed the major story CBS's 60 Minutes did back in November, where they put the spotlight on these questionable practices. But since Matthews missed this huge story, he gets tonight's tool time award for looking completely clueless when it comes to the President's most famous annual speech to the nation.

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You really need to read the New York times. It is by far the best publication around. Scott Brown also introduced a bill and discussed it with NObama after his campaign speech.




The Senate next week will take up legislation seeking to ban lawmakers from profiting on inside information gleaned through their Congressional work, said Senator Harry Reid of Nevada, the majority leader.


Senator Kirsten Gillibrand, Democrat of New York, who co-sponsored the legislation with Senator Scott Brown, Republican of Massachusetts, said on Twitter that she was thrilled with the decision, as the fate of the legislation was unclear at the end of last year.


In his State of the Union address on Tuesday, President Obama advocated for such a bill, saying to enthusiastic applause, “Send me a bill that bans insider trading by members of Congress, and I will sign it tomorrow.”


The issue – which has dogged Congress for decades – came into the spotlight again last year when a “60 Minutes” report looked at Wall Street dealings of top lawmakers, and with the publication of a book that made damning claims about some members. Insider trading is, of course, illegal, but prosecutors have not been inclined to make cases against lawmakers for such violations stemming from their Congressional duties.


The House is expected to bring its own so-called Stock Act to the floor sometime next month.

Representative Eric Cantor of Virginia, the majority leader, told reporters for “60 Minutes” in a subsequent report that he wanted an even more rigorous bill.


“Leader Cantor plans to move an expanded version of the Stock Act through the House to make it clear that those in Congress are subject to the same laws as everyone else,” said Laena Fallon, a spokeswoman for Mr. Cantor. “This common-sense proposal would not only deal with insider trading of stocks, but also prevent federal officials from using insider information for profit in other areas.”

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Congress and the Senate need to pass this one.


Latest Major Action: 1/30/2012 Senate floor actions. Status: Cloture on the motion to proceed to the measure invoked in Senate by Yea-Nay Vote. 93 - 2. Record Vote Number: Senator Burr (R-NC) and Coburn (R-OK) voted against the bill.


Stop Trading on Congressional Knowledge Act of 2012


An original bill to prohibit Members of Congress and employees of Congress from using nonpublic information derived from their official positions for personal benefit, and for other purposes.

Calendar No. 301 112th CONGRESS 2d Session S. 2038


To prohibit Members of Congress and employees of Congress from using nonpublic information derived from their official positions for personal benefit, and for other purposes. IN THE SENATE OF THE UNITED STATES


January 26, 2012

Mr. LIEBERMAN, from the Committee on Homeland Security and Governmental Affairs, reported the following original bill; which was read twice and placed on the calendar A BILL

To prohibit Members of Congress and employees of Congress from using nonpublic information derived from their official positions for personal benefit, and for other purposes.

  • Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,


  • This Act may be cited as the `Stop Trading on Congressional Knowledge Act of 2012' or the `STOCK Act'.




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Reps. Louise Slaughter, Ranking Member of the House Rules Committee, (NY-28) and Tim Walz (MN-01) ,are filing a discharge petition in the House of Representatives to bring HR 1148, the STOCK Act, to the House floor for a clean, up or down vote.


"An overwhelming and bipartisan majority of Congress sees the urgent need to pass the STOCK Act and so far it hasn't happened," said Slaughter. "After stopping this bill in its tracks in December and then stonewalling for nearly two months, it's time for Leader Cantor to end the partisan games and bring this bill to the floor."


"With 271 cosponsors, including 92 Republicans, it is past time to bring the STOCK Act to the House floor for a clean, up or down vote," said Walz. "No more delays. No more partisan games. No more brinkmanship. Let's pass the STOCK Act in the House to make it clear that Members of Congress must play by the same rules as everyone else."


Congressman Tim Walz (MN-01) and Congresswoman Louise Slaughter (NY-28), Ranking Member of the House Rules Committee, re-introduced legislation on March 18, 2011, to ban insider trading on Capitol Hill saying Members of Congress should play by the same rules as everyone else.

Momentum for passing the STOCK Act has been building by the day.


Majority Leader Cantor praised the STOCK Act, January 30 when he said: "The STOCK Act rightfully attempts to ensure that members of Congress do not use insider information to profit personally, and it is imperative that people trust that Members of Congress aren't using public office for personal gain."


The U.S. Senate is poised to pass the STOCK Act. In his State of the Union Address January 24, President Obama stated that if the STOCK Act reached his desk, he would "sign it tomorrow."


The Stop Trading on Congressional Knowledge Act, or STOCK Act, (H.R. 1148) would prohibit Members of Congress and federal employees from profiting from nonpublic information they obtain via their official positions, and require greater oversight of the growing "political intelligence" industry.

The STOCK Act has a broad base of support from organizations dedicated to government reform including Citizens for Responsibility and Ethics in Washington (CREW), Common Cause, Democracy 21, Public Citizen and U.S. PIRG. In a letter to both lawmakers earlier this year, the organizations said, "This measure provides a balanced application of the laws against insider trading to both the private and public sectors and offers the important tool of disclosure for ensuring compliance with the law. The STOCK Act should be adopted by Congress before new scandals arise."


The original version of the Stop Trading on Congressional Knowledge Act (STOCK Act) was introduced in 2006.

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“There's been a lot of talk about fairness over the last several months, certainly as the political campaign heats up. I can tell you there is a sense among people in this country that they don't have a fair shot when they see things that have transpired. Whether it is with their investments in the financial services community, at all levels of government, they are beginning to hear stories about potential conflict of interest on the part of the people that they elect to represent them.

“That's why I'm here today, to say that it is unacceptable for anyone, any Member of Congress, anybody affiliated with this level of government or any other, to profit from insider information or from information that is not available to the public. Period. Because there is this sense out there of untoward behavior, people of this country need to know that Members of Congress are living under the same rules that they are.


“I am glad to see that the Senate is taking up the STOCK Act. I hope that they will take the opportunity this week to strengthen the bill, to expand the bill, and to make sure it works. Depending on what the Senate does, if the Senate produces a bill that we believe is strengthened and something that is workable, that certainly will be something well received by the House. If it does not, it is my intention to move a bill - to bring a bill to the floor in February - that does accomplish the goal of ensuring the public that they have can have confidence that their elected representatives and their voices in Washington are not using their positions to personally profit. So with that I'll be glad to answer some questions.”

Q & A:


”I can tell you first off, the bill does not adequately cover those connected with the federal government in the Executive Branch - that are in positions with access and are privy to information that could be used to personally benefit those individuals. We are looking at ways that hopefully the Senate can work on that language and strengthen the language so the same rules apply to the Executive Branch personnel that have access to that type of information.”


“I have begun to read the book that I think gave rise to some of the broadcast on this issue. Certainly, I think that there is activity that exists that could be characterized in a negative light and lend itself to the public believing that their elected representatives are operating in a way that benefits themselves. So if that's the case, I think we need to make darn sure that people across this country know that Members of Congress and others are not using information that they gained because of their position for personal gain. Again, that's what I would say to the people who may say this is not a necessary vote. So, let’s make it clear, let’s make it the law that there will be and is no insider trading going on, or trading on information for personal gain.”


“I think that the Senate bill, if you look at the Manager's Amendment, the language speaks to the potential misuse of that kind of information and untoward activity on the part of, not Members of Congress, but others that are in the business of monitoring Washington. I think that in advocating - in putting forth a directive to get underneath that kind of activity - to really begin to determine what it is, is something that is helpful. All this should be geared to ensure the public that the trust that they put in Washington is not being violated.”


“One of the things is to make sure that the public is aware of what goes on. If you read some of these books and the one in particular, it talks about the lack of timeliness of disclosure. I have always been one for - whatever the subject - to make sure the public is enjoying its right to know. If you've got to wait a year to know what your elected representatives are doing from financial transactions standpoint, I don't think that is a timely enough schedule for the members of the public to realize that right to know. Thank you very much.”


House Majority Leader Eric Cantor (R-VA)

Press Conference

January 31, 2012

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Guest Widow's Son

All Federal and State public servants should be required not to share intelligence that the general public cannot view to commercial entites that have may economic value.

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