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Friends, Consider this: Prior to 2012, there was no law making it illegal for members of Congress to trade stock based on private information obtained on Capitol Hill. As private citizens, this behavior would be labeled “insider trading”—likely accompanied by stiff fines and potential jail time. That’s why, in 2012, Kirsten wrote and passed the STOCK Act, which forced transparency in Congress' financial transactions and made sure it was illegal for members of Congress, their families, and their staff to profit from insider information gained through public service. At the time, The Washington Post called it “the most substantial debate on Congressional ethics in nearly five years.” The STOCK Act’s passage has proven especially prescient over the past few months, as reports of members of Congress insider trading and profiteering off of non-public information related to the coronavirus pandemic have emerged. Today’s Off the Sidelines spotlight explores the STOCK Act—how Kirsten led the fight to ban insider trading by members of Congress, and why she now believes we need to tighten the rules even further. Thank you, What is the STOCK Act? Kirsten passed the Stop Trading On Congressional Knowledge (STOCK) Act in 2012 to ensure that members of Congress play by the same rules as everyone else. Specifically, the bill: Prohibits members of Congress, their staff, and their families from using private information, acquired through their official positions, for personal benefit (such as buying or selling stocks after receiving non-public information about the impending coronavirus pandemic). Requires every member of Congress to publicly file and disclose any financial transaction of stocks, bonds, and commodities futures on their website within 30 days of the transaction so that abuses can more easily, and quickly, come to light. The STOCK Act is as much a deterrent as it is a vehicle for prosecution—since its passage, no member of Congress has been prosecuted under the law. But that looks like it could change soon. You just described insider trading. Isn’t that already illegal? The way the laws were written and interpreted meant that there was no transparency to determine whether public officials were using inside information to make personal profit. So what changed? In 2011 and 2012, several reports brought the issue to the forefront of public consciousness. A 2011 60 Minutes exposé found—for example—that Alaska Congressman Spencer Bachus had bet against the market in the days leading up to the 2008 financial crash after receiving “apocalyptic” briefings from the Fed Chairman and Treasury Secretary. It was a groundbreaking moment that marshalled public support for legislation that would eventually become the STOCK Act. And a study of data from the nineties found that U.S. senators’ stock trades outperformed the market by 12% per year: *SOURCES: Abnormal Returns from the Common Stock Investments of the U.S. Senate: (Alan J. Ziobrowski, Ping Cheng, James W. Boyd, and Brigitte J. Ziobrowski); VICE Why wasn’t this sort of self-serving behavior already evident? Because, prior to the passage of the STOCK Act, members of Congress weren’t required to disclose their financial transactions in real time. Now, when you buy or sell a stock that’s worth more than $1,000, you have to disclose that purchase or sale within a much shorter window. Did both Democrats and Republicans support the STOCK Act? Yes. Kirsten introduced the STOCK Act with then-Massachusetts Senator Scott Brown, and the Senate voted 96-3 in favor of the bill. Does the STOCK Act go far enough? No. Kirsten believes that there should be a prohibition on members of Congress and the Administration owning stocks. Members of Congress are privy to enormous amounts of classified and non-public information. It’s part of how they’re able to effectively legislate. Compliance with the STOCK Act would be far easier if members of Congress didn’t have the benefit of owning stocks. Not to mention, it would help restore the public’s trust in their representatives. WATCH | Kirsten sat down with MSNBC’s Ari Melber in March to discuss reported violations of the STOCK Act by several congressional colleagues. READ | This Politico op-ed by one of the authors of the STOCK Act argues that members of Congress should not be allowed to trade stocks at all. WATCH | This Vice News interview with Kirsten breaks down the components of the STOCK Act and why we need additional reforms to curb insider trading in Congress.
Since her first day in the House, Kirsten has led the way on transparency and accountability for elected officials. She was the first member of congress to post a “Sunlight Report,” which included her official schedule, financial disclosures and earmark requests online. She doesn’t accept corporate PAC money, and refuses donations from federal lobbyists. The STOCK Act is an extension of that work—and its relevance today is a reminder that we need more leaders in Congress whose values are never for sale. It’s why Kirsten and Off the Sidelines have teamed up with End Citizens United: To elect candidates who are committed to getting money out of politics and restoring faith in our democracy. If you agree, split a donation between Off the Sidelines and End Citizens United today. Your donation will help power the campaigns of reform-minded candidates like Congresswoman Lucy McBath in Georgia, Governor Steve Bullock in Montana, and Theresa Greenfield in Iowa.
Stefanie
| Paid for by Gillibrand for Senate |
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