In a sweeping unanimous vote, members of Congress voted to overturn parts of the Stop Trading on Congressional Knowledge (STOCK) Act that previously banned 28,000 federal employees, including members of Congress, from engaging in insider trading, requiring them to make financial disclosures publicly online. The bill passed into law April 2012 after lengthy debate, but took less than one minute to repeal in both the Senate and the House last week — President Barack Obama has since signed the newly-repealed bill into law.
The Stop Trading on Congressional Knowledge (STOCK) Act, was a law passed last year designed to prevent insider trading among lawmakers and government officials by requiring them to post disclosures of financial transactions online.
According to official records, no Republican or Democrat objected in the unanimous repeal, consuming just 10 seconds worth of time in the Senate and 14 seconds in the House, according to official records. House Majority Leader Eric Cantor (R-Va.) was one of the leading proponents of the repeal basing his decision on the a recommendation made by the National Academy of Public Administration. “This was their recommendation and the House and Senate agreed it was the best course of action,” he said.
Government officials will still have to file disclosures of securities trades more than $1,000 within 45 days, but they no longer have to file them in a searchable database that is readily available to the public. Despite robust support for STOCK last year, President Obama signed the repeal into law Tuesday.
Lawmakers contend that the repeal is a necessary security measure. The National Academy of Public Administration, a nonprofit group, published a report last month declaring that posting financial transactions histories online would create an “unwarranted risk to national security and law enforcement, as well as threaten agency missions, individual safety and privacy.” The group has recommended that the online posting requirements should be suspended indefinitely.
The original STOCK legislation followed a “60 Minutes” television report highlighting how some members of Congress are making money on stock trades illegally by having insider knowledge of upcoming decisions by major corporations and financial institutions before they are announced to the public.
Lawmakers have been involved in shady dealings that some believe is evidence of insider trading. In a notable example, Senator Dick Durbin (D-Ill.) sold more than $115,000 worth of stocks and mutual fund shares in September 2008 as U.S. stock markets plummeted during the worst financial downturn since the Great Depression. He used much of the money to invest in Warren Buffett’s Berkshire Hathaway Inc.
Durbin’s 2008 financial disclosure statement shows that he sold mutual fund shares worth $42,696 on Sept. 19, the day after then-Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke urged congressional leaders in a closed meeting to craft a bank bailout to help financially troubled banks.
The Sunlight Foundation, a government accountability watchdog group, reported that despite its rapid passage, there were delays in making the details of the STOCK repeal available to the public. “The bill was not available to the public on the Library of Congress website,” Sunlight reports.
Spokespeople for Sunlight believe that the repeal could open the door for illegal trades. “[The repeal] sets an extraordinarily dangerous precedent suggesting that any risks stem not from information being public but from public information being online,” said Lisa Rosenberg of the Sunlight Foundation.
Congress Repeals Disclosure Of Financial Transactions, Critics Decry Insider Trading
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