Taking STOCK
Feb 03, 2012 - OPINION
Yesterday, the Senate passed their version of the Stop Trading on Congressional Knowledge Act, also known as the STOCK Act. To the passing observer, the legislation seems like a good thing. After all, everyone agrees that congressional members and aides should not be allowed to make money using knowledge gained from their office that isn't public information. Unfortunately, the simple and inescapable truth is that it is already illegal for members of Congress to use inside information for financial gain, and the legislation is a slap in the face to every citizen in the country that obeys the laws of this nation on a daily basis.
When 60 minutes originally broke the story, most the country asked itself the same question: How is Congress exempt from insider trading laws? Most people didn't have the time to investigate that question, but those who did came to the conclusion that Congress simply isn't exempt, they are breaking the law and then claiming that they have no "corporate responsibility" and therefore the law doesn't apply to them.
If you were angered by this claim, then the STOCK Act itself will drive you into a rage which is usually reserved for those who insist upon driving in the left lane while texting Shakespeare. The STOCK Act does not repeal some unknown provision which exempted Congress from insider trading laws or remove some vague rule which somehow allowed Congress to get away with such law breaking. What the law does do is simply "affirm" that insider trading laws do indeed apply to Congress.
SEC. 4. PROHIBITION OF INSIDER TRADING.(a) Affirmation of Non-exemption- Members of Congress and employees of Congress are not exempt from the insider trading prohibitions arising under the securities laws, including section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. ...`(g) Duty of Members and Employees of Congress-`(1) IN GENERAL- For purposes of the insider trading prohibitions arising under the securities laws, including section 10(b) and Rule 10b-5 thereunder, each Member of Congress or employee of Congress owes a duty arising from a relationship of trust and confidence to the Congress, the United States Government, and the citizens of the United States with respect to material, nonpublic information derived from such person's position as a Member of Congress or employee of Congress or gained from the performance of such person's official responsibilities.
The sheer magnitude of the arrogance of this legislation is stunning. It tells the rest of the country that Congressional members believe that it is within their power to simply deem that laws do and do not apply to them, their aides, and anyone else that they, as noblemen, deem to be exempt from the laws they create. It is an admission that they have ignored laws in the past and simply waved their hands while claiming "these laws don't apply to us" in a manner that would make Obi-wan Kenobi jealous.
Three Senators agreed with this sentiment, and voted against the legislation. Senator Richard Burr released a statement noting that the US laws already apply to Congress and that it was a waste of time to debate and vote on such measures. He indicated that Senator Tom Coburn, who also voted against the bill, shared this view and presumably the third dissenter, Senator Jeff Bingaman does as well.
These men should be commended for standing up against a ruling body that mistakenly believes that they have the right to determine what laws apply to what people. Unfortunately, the madness of the legislation doesn't stop there. In an effort to introduce true ethics reform, Senator Sherrod Brown of Ohio introduced an amendment to prevent a member of Congress from owning specific stock and from placing bets on stock. Congressional members would be allowed to own a blind trust of mutual funds and non-specific entities. That amendment failed 26-73, indicating that once the attention of the populace is returned to their daily work, Congress will go back to the business of making money for itself.
The simple and inescapable truth is that Congressional members behave in any manner they desire with respect to white collar laws. The fact that 60 minutes was able to discover such wide ranging evidence of insider trading with no prior or resulting legal action tells us that no one is minding the store. There is no legal entity acting to ensure that these people are behaving legally and morally and they seem determined to protect each other by banding together to pretend as if laws hadn't applied to them in the past, but they will from this day forward.
The STOCK Act has no merit. If it was a company, Congressional members would be betting against it on the market.