Senate Passes the STOCK Act

On February 3, 2012 the Senate passed the Stop Trading on Congressional Knowledge Act of 2012, also known as the STOCK Act. A total of 12 votes were taken on the legislation, including a cloture motion, the passage of the bill, and 10 votes on amendments. Of the ten amendments voted on, only three garnered enough votes to pass.

As described in the official summary, the STOCK Act prohibits members of congress and congressional employees from using any nonpublic information derived from their positions as members or congressional employees for personal benefit. It applies the insider trading prohibitions of the Securities Exchange Act of 1934 to Congress and Congressional aides. 

Of the three amendments that passed, two were designed to ensure that the reporting requirements within the legislation were also applied to the executive branch. The third will begin to require disclosure of political intelligence activities under the Lobbying Disclosure Act of 1995. Political intelligence activity is defined as any communication to or from a covered executive branch official or a covered legislative branch official when the information dealt with is intended to be used in analyzing securities or commodities markets, or in informing investment decisions, and which is made on behalf of a client with regard to federal legislation.

Of the amendments that were rejected, an amendment by Senator Paul was rejected 37-61 that would have added a line to the Congressional financial disclosure forms that certify that none of the transactions disclosed in that form were carried out  with non-public knowledge.

A second amendment put forth by Senator Paul would have prohibited executive branch appointees or staff from holding positions that give them oversight, rule-making, loan or grant-making abilities over industries or companies in which they or their spouse have a significant financial interest. It failed 48-51.

Two attempts were made to attach amendments to prohibit earmarks in the future and were failed, but reports indicate that the House and Senate have agreed to continue their moratorium on earmarks.

Senator Brown also introduced an amendment that stated that "congressional members and staff shall be prohibited from holding and shall divest themselves of any covered transaction that is directly and reasonably foreseeably affected by the official actions of such covered person, to avoid any conflict of interest, or the appearance thereof. Any divestiture shall occur within a reasonable period of time." In other words, Congressional members cannot own specific stock, and cannot put bets against stock. They would be allowed to own bonds and mutual funds. That measure also failed 26-73.

In one of the most telling votes in recent history, Senator DeMint put forth an amendment expressing the sense of the Senate that members should be term limited. The specific limit for each Senator was to be set at a later date. That measure failed 24-75.