Congress Quickly and Quietly Repeals Congressional Insider Trading Ban, That Required Financial Disclosure
April 15, 2013
While Congress might be stuck in a deadlock on just about every issue imaginable, there’s one piece of legislation that both Democrats and Republicans hate unanimously: the Stop Trading on Congressional Knowledge (STOCK) Act, a law passed last year designed to prevent insider trading among lawmakers and government officials by requiring them to post disclosures of their financial transactions online.
Both parties and both houses of Congress hated the disclosure portion of the law so much that it was repealed on Friday without debate—the measure was sent to the president by unanimous consent. The ordeal took about 10 seconds in the Senate and 14 seconds in the House, according to official records.
The STOCK Act would have required members of Congress, their aides, and other federal employees making more than $119,554 a year to disclose their financial dealings in an online database. It was supposed to prevent government officials from using insider knowledge about policy-making to profit from stock trades and other investments.
Upon the signing of the bill into law last year (pictured above), President Barack Obama said, “The idea that everybody plays by the same rules is one of our most cherished American values. It’s the notion that the powerful shouldn’t get to create one set of rules for themselves and another set of rules for everybody else, and if we expect that to apply to our biggest corporations and to our most successful citizens, it certainly should apply to our elected officials—especially at a time when there is a deficit of trust between this city and the rest of the country.” The White House has not said whether the president will sign the repeal.
Despite the repeal, government officials will still have to file disclosures of securities trades over $1,000 within 45 days, but they no longer have to file them in a searchable database that was to be easily accessible to the public.
Congress and the President had delayed the online posting portion of the act from going into effect 3 times already, but the ultimate repeal came after the National Academy of Public Administration, a nonprofit group, found that publishing the information would create an “unwarranted risk to national security and law enforcement, as well as threaten agency missions, individual safety and privacy,” in a report delivered last month. The group suggested that the online posting requirements should be suspended indefinitely.
Lisa Rosenberg of the Sunlight Foundation, a nonprofit group advocating for government transparency, said that the repeal “sets an extraordinarily dangerous precedent suggesting that any risks stem not from information being public but from public information being online.”
Rosenberg raises an interesting point: Since these financial disclosures are still considered public information, how does not posting them on the Internet mitigate their potential risks to national security? How does obfuscating information about the financial activities of government officials help anyone, other than those officials? Does the potential danger come from foreign terrorists knowing this information or from those citizens who just to know if their government officials are behaving responsibly?
Congress Repeals Financial Disclosure Requirements For Senior U.S. Officials
By EYDER PERALTA
Note the Update at the bottom, to see how seriously Congress takes government corruption and transparency.
A tourist takes cover underneath an umbrella while snapping a photo of the U.S. Capitol on March 6, 2013 in Washington, DC.
Chip Somodevilla/Getty Images
Joining the Senate, the House of Representatives approved a measure today that repeals a requirement that top government officials post financial disclosures on the Internet.
The House, like the Senate, acted quietly without a vote. Instead, they sent the measure to the president’s desk by unanimous consent.
The provision was part of the Stop Trading on Congressional Knowledge Act (Stock), which became law in March of 2012. The act was intended to stop members of congress from profiting from nonpublic information.
As NPR’s Tamara Keith reported, at the time, Sen. Joe Lieberman called the law “the most significant congressional ethics reform legislation to pass Congress in at least five years.”
“That law mainly addressed conflict-of-interest policies for members of Congress and their staffs, but it also included a requirement that the financial disclosure forms filed by some 28,000 high-ranking federal employees be posted online.
“While those forms are public records, they must be requested individually from employing agencies. The Stock Act envisions online posting first on agency sites and later in a central, searchable database.
“The posting requirement was delayed three times out of concerns about the potential for identity theft and other crimes against career employees, as well as security risks to the government.”
The Sunlight Foundation, which advocates for a more open government, called today’s repeal an “epic failure.”
The foundation explained that instead of addressing specific security concerns, Congress has acted broadly.
For instance, they note, the president, vice president, members of Congress, congressional candidates and individuals subject to Senate confirmation are still required to make their financial disclosures public. But the change in law now makes the posting of those disclosures on the Internet optional.
“Not only does the change undermine the intent of the original bill to ensure government insiders are not profiting from non-public information (if anyone thinks high level congressional staffers don’t have as much or more insider information than their bosses, they should spend some time on Capitol Hill) but it sets an extraordinarily dangerous precedent suggesting that any risks stem not from information being public but from public information being online.
“Are we going to return to the days when the public can use the Internet to research everythingexceptwhat their government is doing? Will Congress, in its twisted wisdom, decide that information is public if journalists, academics, advocates and citizens are forced to dig through file cabinets in basements in Washington, DC to find it? And does anyone think that makes us safer?
“As my colleague Tom Lee noted, ‘This approach is known as ‘security through obscurity.’ Essentially, the idea is that rather than fixing a system’s flaws, you can just make the system opaque or unusable or unpopular enough that those flaws never surface.’”
Update at 5:35 p.m. ET. 30 Seconds:
NPR’s Tamara Keith tells us the House procedure took exactly 30 seconds.
Obama signs STOCK Act modification
The Hill, April 15, 2013
President Obama quietly signed legislation Monday that rolled back a provision of the STOCK Act that required high-ranking federal employees to disclose their financial information online.
The White House announced Monday that the president had signed S. 716, which repealed a requirement of the Stop Trading on Congressional Knowledge (STOCK) Act requiring the disclosure, which had previously been delayed several times by Congress.
That provision, added to the bipartisan bill aimed at halting insider trading by members of Congress, would have required roughly 28,000 senior government officials to post their financial information online, and had come under harsh criticism from federal government employee unions.Both chambers of Congress quickly — and near silently — approved the repeal legislation at the end of last week by unanimous consent, just before heading home to their districts.
The STOCK Act was signed by the president a little over one year ago in a highly visible signing ceremony, where he said the legislation would tackle the “deficit of trust” that exists between Washington and the rest of the nation.
The new law scraps a provision that had been hotly contested by federal employees, as well as found to be problematic and even dangerous for high-ranking government workers. Congress twice had passed legislation to delay its implementation. Under that provision, high-ranking government workers would have been required to post their financial information on a publicly available online database.
Under a previous delay, Congress called for the National Academy of Public Administration to study the implications of the requirement. The report, released in March, found the provision should be repealed, having found that it could needlessly threaten the safety of government employees abroad, as well as make it difficult to attract and retain talent in the public sector.
The Senate advanced the bill Thursday by unanimous consent, without debate or even briefly describing what it would do. The House signed off on the bill Friday using the same approach.
Under the new law, the beefed-up reporting requirements will still apply to the president, vice president, members of Congress and candidates for Congress. Some presidentially nominated and Senate-confirmed government employees would also still adhere to the new disclosure requirement. The new law also delays the creation of that database until the beginning of 2014.
Versions of the STOCK Act had been introduced for several years, but it was fast-tracked at the Capitol following media reports that suggested members of Congress might have profited from private information obtained during their legislative work. Members singled out in the reports maintained their innocence, but the spotlight spurred quick action on enacting legislation emphasizing that members of Congress be subject to insider trading laws among their disclosure enhancements