WASHINGTON, DC – In a speech on the floor of the U.S. Senate, U.S. Senator Amy Klobuchar today called on her colleagues in the Senate to join her in supporting bipartisan legislation prohibiting members of Congress from engaging in insider trading. The STOCK Act redefines insider trading to include knowledge gained from Congressional work and service and creates new rules and reporting requirements. The bill is similar to the legislation that Minnesota Congressman Tim Walz introduced in the House of Representatives.
“Those of us who have the privilege of writing the rules have a responsibility to play by them—to not just talk the talk, but to walk the walk,”Klobuchar said. “This common sense bill will strengthen our democracy by ensuring no federal employee or member of Congress can profit from nonpublic information they’ve obtained through their position.”
Currently, insider trading by members of Congress and their staffs is not prohibited by the Securities Exchange Act or Congressional rules. In addition to revising the statute to enable the Securities and Exchange Commission to prosecute cases of insider trading by members of Congress, like a similar version in the House of Representatives, this legislation would also make it a violation of the rules of the House and Senate to engage in such an activity. This creates more accountability so that anyone who uses their role as a member of Congress to enrich themselves would be answerable not only to the Department of Justice and the Securities and Exchange Commission, but also to Congress’s own ethics rules.
The STOCK Act will do the following:
The STOCK Act Clearly Prohibits Insider Trading in Congress. Under the STOCK Act, members of Congress and their staff will explicitly be barred from buying or selling securities on the basis of non-public knowledge gained through their Congressional service – or from using that knowledge to tip off anyone else. The STOCK Act makes it clear that trading on non-public information would violate the duty of trust members of Congress and their staff owe their constituents by establishing a clear fiduciary responsibility.
The STOCK Act Significantly Strengthens Disclosure Requirements.Currently, members of Congress annually disclose the purchase or sale of securities and commodities. The STOCK Act not only imposes a tough 30 day disclosure requirement, but also requires that the information is published online to ensure complete transparency and easy public access to the information.
The STOCK Act Requires GAO To Investigate Role Of “Political Intelligence” Firms. The STOCK Act requires the Government Accountability Office to investigate the role of “political intelligence” firms, which try to learn inside information from lawmakers and their staffs and sell that information along to private clients.
The full text of Klobuchar’s prepared remarks is below.
I rise today in strong support of the Stop Trading on Congressional Knowledge, or STOCK Act—legislation that is critical to increasing accountability in federal office and restoring the public’s faith in government.
I’m a co-sponsor of the STOCK Act and have been working to address concerns about insider trading in Congress. I appreciated the leadership of my colleague from Minnesota Tim Walz, who spearheaded the bill in the House…as well as my colleagues in the Senate, including Kirsten Gillibrand who has shown tremendous leadership in moving the issue forward.
Mr. President, no one is above the law in this country. Least of all lawmakers. At a time when Americans are crying out for leaders who are willing to put public interest before political gain, the STOCK Act presents a rare opportunity for both parties to come together and pass a bill that not only makes for good policy, but that is, very simply, the right thing to do.
Over the last few years, we’ve worked to restore accountability and integrity to the major institutions in this country.
We’ve worked to reign in recklessness on Wall Street, we’ve enforced greater accountability in federal budgets, and in 2007, we passed historic reforms to strengthen congressional ethics laws.
But I’m standing here today because we can and must do more. Those of us who have the privilege of writing the rules have a responsibility to play by them—to not just talk the talk, but to walk the walk, and the STOCK Act is about making sure we’re doing that.
This common sense bill will strengthen our democracy by ensuring no federal employee or member of Congress can profit from nonpublic information they’ve obtained through their position.
First and foremost, the legislation clarifies and strengthens laws for regulating insider trading by members of Congress and their staff. It redefines the practice to clearly state that it is illegal to purchase assets based on knowledge gained through congressional work or service, ensuring members of Congress are held to the same standards as the people we represent. That only seems fair.
Now, some people have argued that there are already laws on the books for this.
But the fact of the matter is that insider trading by members of Congress and their staff is currently not prohibited by the Securities Exchange Act or Congressional rules.
Furthermore, the status of trading on Congressional information has never been explicitly outlined.
The resulting ambiguity has made it incredibly difficult to enforce these rules, which is almost certainly part of the reason not a single violation has ever been prosecuted.
The STOCK Act would clear up the ambiguity and make these laws crystal clear. It would give both the SEC and the Ethics committees in each chamber the authority to investigate and prosecute cases of insider trading.
And it would make it a violation of the rules of the House and Senate to engage in such activity—meaning that anyone who uses their role as a member of Congress to enrich themselves would have to answer to the Department of Justice and the Securities and Exchange Commission.
The bill would also enforce better oversight by significantly strengthening reporting requirements. Members of Congress are already required to disclose the purchase or sale of securities and commodities on annual basis and the STOCK Act would take those requirements several steps further:
Not only would it mandate that members and employees report any and all transactions of over $1,000 within 90 days of the trade… it would also impose a tough 30 day disclosure requirement and require that related information be published online.
Finally, to close the revolving door between Congress and special interested groups, the STOCK Act would introduce some much-needed transparency into the industry known as “political intelligence consulting”—the practice of reaching out to people working the legislative and executive branches and trying to gain market intelligence regarding proposed rules, regulations and bills.
The STOCK Act would require The Government Accountability Office to study this issue and see what we can do to ensure these consultants are subject to the same reporting requirements and restrictions imposed on lobbyists.
Mr. President, trust is the tie that binds our democracy. But with faith in government now at an all time low, it’s clear that those ties have frayed. Why would we not want to strengthen those bonds? Why would we not want to show the people that sent us to Washington that we have nothing to hide by passing this bill?
America was built on the principles of hard work, fair play and personal responsibility. Those are the rules that middle class families in states like Minnesota and all across America are still playing by today. We in Congress need to be willing to stand up and say we’re willing to do the same.
I want to end my remarks today by sharing two letters that were sent to my office on the subject of the STOCK Act. The first is from a Minnesotan named Robert, who wrote:
“Elected officials need to get back to the business of representing those who sent them to Washington to serve, not increasing their personal wealth based upon information they learn from holding those offices—information that, were it not for their elected office, they would otherwise not be privy to.”
The second letter comes from a Minnesotan named David, who makes this issue crystal clear. He said:
“Voters elect politicians to do what is best for the country, not to become rich.”
I couldn’t have put it better myself and I couldn’t agree more.
I urge my colleagues to join me in supporting the STOCK Act, which will strengthen our democracy and help restore faith in the institution of Congress, and in the incredible public servants that I know my colleagues to be.
Thank you, I yield the floor.
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