Senate Floor Statement on the STOCK Act
Thursday, March 22, 2012
Mr. President, today the Senate has the opportunity to vote in support of the STOCK Act. If we vote for the House amendment to the Senate bill, we can send this legislation right to President Obama to be signed into law. That’s exactly what we should do.
The lifeblood of our democratic government is the contract between the people and their elected representatives, a contract that must be based on trust that elected officials will act for the good of our nation and in the interests of their constituents, and not for personal gain. To ensure that we maintain that trust, our nation has laws and our Congress has rules that establish clearly the responsibilities of government officials, members of Congress and their staffs and provide for the enforcement of violations.
The legislation before us is, in a way, preventative maintenance to protect that trust. It is a tightening up of our legal and ethical guidelines as part of what must be a constant effort to assure that the interests of our nation and our constituents come first. Our constituents must have confidence that members of Congress and our staffs will not use our positions for our personal financial benefit.
To be clear, as it stands now, it is a violation of the trust our constituents place in us, a violation of the democratic process, a violation of the securities laws, and a violation of congressional ethics rules for members of Congress or their employees to engage in insider trading – the use of information not available to the public to make investment decisions. But questions have been raised about insider trading by members of Congress. The legislation before us today is designed to ensure that those questions are answered. It removes any doubt that insider trading by members and employees of Congress is against the law and against Congressional rules. It is important to remove that doubt because any appearance of a breach in trust between Congress and our constituents is corrosive to honest, open and effective government.
Back in December, the Homeland Security & Governmental Affairs Committee, of which I am a member, held extensive discussions on the need to preserve that trust, including a very productive hearing on December 1. Later in December, our Committee held a markup and approved the Stop Trading on Congressional Knowledge Act, or STOCK Act. I want to commend our chairman, Senator Lieberman, and our ranking member, Senator Collins, for their leadership, and the many members of the committee, Democratic and Republican, who made contributions to that process.
Two things became clear during our hearings and our markup. The first is that there was consensus that we should remove any uncertainty about the prohibition against insider trading. The second thing that became clear was significant bipartisan desire to avoid any unintended consequences as we sought to remove any uncertainty. We reported out the legislation because of widespread agreement on our goals, but there remained concerns about the means, and it was understood that we would attempt to address those concerns before the bill came to the floor.
And so a number of us worked in the weeks after the markup to make sure that our goals and our means were in concert. We met that objective, and our consensus was reflected in the language of the bill that passed the Senate by a vote of 96 to 3. The House amendment before us today retains the key language from the Senate bill that Senator Lieberman, Senator Collins and I, among others, worked so hard to get right. While some provisions that I supported have been removed by the House amendment, the central purpose of this bill remains the same. The House amendment, like the Senate bill it replaces, removes any uncertainty over the prohibition on insider trading, and it avoids unintended harmful consequences that concerned some of us.
I would now like to discuss two critical provisions in the bill before us today. The first reassures the American people that there are no barriers to prosecuting members and employees of Congress for insider trading. It does so through language establishing that members and employees of Congress have a duty arising from “a relationship of trust and confidence” with the Congress, the government, and most importantly, with the American people. Establishing such a duty removes any doubt as to whether insider trading prohibitions apply to Congress. It is also important that the bill’s language makes clear that in offering this new language it does not in any way prevent enforcement of the anti-insider trading provisions contained in current law. Again, I am confident that under current law, members of Congress and our staffs are prohibited from insider trading. This bill will ensure that the current prohibition is unambiguous, and thereby strengthened.
The second major provision of the legislation instructs the Ethics Committees of both chambers to issue clear guidance to members and staffs regarding the prohibition on profiting from inside information. This guidance will clarify that existing rules in both chambers relative to gifts and conflicts of interest also prohibit the use of nonpublic information gained in the conduct of official duties for private profit.
Let me briefly mention one other provision, unrelated to insider trading but nonetheless an important step forward in terms of gaining the confidence of our constituents. As one of the originators of the Lobbying Disclosure Act of 1995, I am well aware of the value of transparency in government. The bill before us improves congressional transparency by requiring that personal financial disclosure filings required of members and certain staff are made available electronically to the public. But because this bill also significantly expands the number of officials required to file public disclosures, including law enforcement, military, and intelligence officers, it is critical that this provision be implemented in a way that is consistent with our national security interests. Care should be taken to ensure that public filers are not made unnecessarily vulnerable to malicious use of personal information.
The House amendment also removes a provision of the Senate bill that would have required political intelligence consultants to register in a way similar to how lobbyists are required to register currently. Instead, the House amendment, like the version of the Senate bill that was reported by the Homeland Security and Governmental Affairs Committee, requires the Comptroller General of the United States to study the role of political intelligence in financial markets and report back to Congress. It is corrosive of open government for political intelligence consultants to sell their access to officials. Before Congress acts to address this issue, we must learn more about it, which is why I support this study. I look forward to working with my colleagues to address this issue once we have the benefit of the Comptroller’s report.
In addition to the insider trading and disclosure provisions, this bill contains numerous other important improvements to our ethics laws. I urge my colleagues to join together today, to pass this legislation and send it to President Obama for his signature.