Congress will soon take up legislation to stop so-called "congressional insider trading," but a pair of senators say that the bill does not go far enough. They say it should also prevent senators from owning individual stocks unless they are in a blind trust.
Democratic Sens. Sherrod Brown of Ohio and Jeff Merkley of Oregon are introducing legislation Wednesday that would require senators to divest themselves of any stock holdings or put their stocks in a blind trust. The legislation will be offered as an amendment to the Stop Trading On Congressional Knowledge Act, or STOCK Act.
"Senators shouldn't be voting on issues that affect their financial investments," Brown told reporters Wednesday.
The STOCK Act is primarily a bill to stop "congressional insider trading," an issue brought to the fore by a.
Like everyone else, members of Congress are subject to insider trading laws. However, some contend that current insider trading laws do not apply to nonpublic information about current or upcoming congressional activity. For example, if a lawmaker learns an upcoming bill will grant a company a large government contract, which could boost that company's stock, he or she is free to buy that stock ahead of the bill's public introduction.
Merkley said that simply barring insider trading "doesn't address the fundamental issue of a conflict of interest."
Currently, Senate committee staff members making more than $25,000 a year are required under Senate ethics rules to divest themselves of any substantial holdings that could be affected by the committee for which they work. Similarly, executive branch employees and their spouses and children are prohibited from owning stock in companies that they regulate. Neither of these rules apply to members of Congress.
The bill Brown and Merkley are proposing, called the "Putting the People's Interests First Act of 2012," would change that. In addition to holding stocks in a blind trust, it would allow senators to invest in broad-based funds (but not in funds in a particular industry).
Barring senators from owning any individual stocks isn't overreach, Brown said, since Senate decisions are "affecting major parts of our economy almost every day."
"Members of the Senate who own oil stock shouldn't be voting on energy legislation, period," he said.
Merkley said that "several senators" have told him they are not happy with the amendment.
Brown said he doesn't expect to win any popularity contests with the amendment but that "it's the right thing to do."
"Public service is a privilege," he said. "There's no reason any of us need to be buying or selling stocks in multi-million dollar portfolios."
Brown himself once held 100 shares of Time Warner stock even as he continued to advocate for broadband expansion. The senator explained that the shares were given to him by his father before his death and that he soon sold them for around $2,000. He also acknowledged that he inherited J.P Morgan stock after his mother's death, which he quickly sold.
"I shouldn't hold any of these," he said. "I thought that selling it made the most sense."
Some lawmakers have talked about other, and House Majority Leader Eric Cantor said he would bring his own version to the House floor next month if the Senate doesn't bolster its bill. However, the STOCK Act's original House sponsors today called on House leaders to put the bill up for an up-or-down vote.
"With 271 cosponsors, including 92 Republicans, it is past time to bring the STOCK Act to the House floor for a clean, up or down vote," Rep. Tim Walz, D-Minn. said in a statement. "No more delays. No more partisan games. No more brinkmanship. Let's pass the STOCK Act in the House to make it clear that Members of Congress must play by the same rules as everyone else."