With public approval of Congress at an all-time low this year, a recent “60 Minutes” report shining a light on insider trading among members of Congress elicited outrage among an already disillusioned public. But the report has also spurred a renewed focus on banning the practice among members of Congress, which has been gaining momentum in recent weeks.
The “60 Minutes” investigation (which originally aired on November 13), based on the recent book “Throw Them All Out” by conservative-leaning author Peter Schweizer, alleged that several members of Congress in both parties had benefited from lucrative stock trades based on non-public information obtained on Capitol Hill. In the report, Schweizer alleged that members of Congress had been involved in several trades that posed serious conflicts of interest, including trades in health-care stocks during the 2009 health care debate and shorting stocks in the days preceding the 2008 global financial crisis.
In the House, the Stop Trading on Congressional Knowledge (STOCK) Act, originally introduced in 2004 by Rep. Louise Slaughter (D-NY) and Rep. Tim Walz (R-Minn), has been reintroduced every session but has failed to garner enough co-sponsorship or support to push the bill through. However, in recent weeks, the STOCK Act has surged in popularity and has attracted more than 150 co-sponsors willing to endorse the bill.
Anti-insider trading legislation is also making headway in the Senate. Just two days following the report, Senator Scott Brown (R-Mass) introduced a bill explicitly banning members of Congress from engaging in insider trading and requiring them to report all securities exchanges of more than $1,000 within 60 days. Senator Kirsten Gillibrand (D-NY) followed suit shortly afterward with her own version of the bill, although her version has faced sharp criticism from observers who say the language contains a number of serious flaws that prevent its effectiveness. Senator Joseph Lieberman (I-Conn) has pushed for a Senate committee vote to take place in mid-December, and requested that the Gillibrand and Brown versions of the bill be consolidated into one.
At a hearing last week held by the House Financial Services Committee, some witnesses argued that current laws against insider trading already apply to members of Congress, rendering new legislation unnecessary. However, Lieberman said that existing law “is not as clear as it needs to be.”