The Stop Trading on Congressional Knowledge Act (STOCK Act) was introduced in the House by Representative Louise Slaughter (D-NY) and Representative Tim Walz (D-MN) in March 2011 (H.R. 1148). Representative Slaughter had introduced similar legislation for the past six years, though the legislation only picked up momentum in Congress after the airing of a 60 Minutes report related to questionable congressional trading activity. Following the airing of the report, co-sponsorship of the bill exploded and the bill gained unstoppable momentum. Similar Senate bills were also introduced including S.2038, which ultimately became the Senate vehicle.
The legislation seeks to clarify the current law regarding insider trading by Members of Congress, staff, and Executive Branch officials. The bill creates a specific fiduciary duty for Members and staff with respect to knowledge obtained as a result of their position and prohibits certain federal employees from buying or selling securities, swaps, or commodity futures based on nonpublic, material information gained during the course of their employment. Under the legislation, such employees would have to report the purchase, sale or exchange of any stock, bond, or commodity future transaction in excess of a certain amount, within 30 days of the transaction. The legislation would also prohibit such employees from disclosing nonpublic information relating to any pending or prospective legislative action relating to commodities or securities. The leading Senate bill, S. 2038, and H.R. 1148 as introduced would also require the registration under the Lobbying Disclosure Act of “political intelligence consults” when their clients use the information they aggregate or obtain to make financial decisions.
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