In one of Washington’s rare bipartisan bill-signing ceremonies, President Obama on Wednesday enacted the STOCK Act, a set of new financial disclosure requirements designed to prevent insider trading based on information gathered in the course of work by members of Congress and top executive branch officials.
At a ceremony in a White House auditorium attended by some dozen lawmakers and Vice President Joe Biden, Obama hailed the new law as one step toward closing “the deficit of trust between this city and the rest of the country.” He added, “The notion that everybody plays by the same set of rules is one of our most cherished values.” He did not mention the impact on federal employees.
Though lawmakers as varied as Sen. Scott Brown, R-Mass., and Rep. John Larson, D-Conn., attended the event, Obama noted that the bill’s chief champion Rep. Louise Slaughter, D-N.Y., was absent due to a broken leg.
Also absent was House Majority Leader Eric Cantor, R-Va., who played a key role in the bill’s final passage. His staff said he was invited but had district events to attend. Cantor posted a statement on his website saying, “The STOCK Act demonstrates that we can come together and deliver results for the American people, and we should build on this momentum going forward.”
The Stop Trading on Congressional Knowledge Act seeks to clarify an ambiguity in the 1934 Securities and Exchange Act by prohibiting members of Congress and their staffs from trading on information they obtain from their work that is not available to the general public. The law requires disclosure 30 days after any securities trade of more than $1,000 and compels all disclosures to be available electronically.
Aimed primarily at Congress and supported by many ethics watchdog groups, the act gathered momentum last year after a 60 Minutes expose on the trading profits made by some high-level lawmakers at a time when Congress’s public approval rates are stunningly low. The idea of broadening the legislation to cover some 28,000 federal employees occurred late in the legislative process.
Senior Executives Association President Carol A. Bonosaro told Government Executive she was “disappointed” and wished Obama had vetoed the bill, “but it’s understandable given the nature of the act and its application to Congress. It was an impossible situation.”
SEA’s concerns are twofold, Bonosaro said. First there is a burden on agency ethics office, on the Office of Government Ethics and on career executives, she said. Second, “there is potential for privacy to be invaded” by making more financial information available on a public website that might become a “prime phishing site for identify theft,” she said.
The association plans to pay attention to how the Office of Government Ethics writes the regulations, hoping to encourage as much privacy protection as possible, Bonosaro said.
The Office of Government Ethics posted a statement saying it “fully supports the act’s focus on improving transparency and promoting public confidence in government and is carefully analyzing the provisions of the new law. In consultation with [designated agency ethics officials] and other senior agency ethics officials, OGE will issue a series of legal, program and education advisories to implement the act’s provisions.”
A positive view of including federal employees was offered by the nonprofit OMBWatch, whose federal information policy analyst Gavin Baker attended the ceremony. OMBWatch’s analysis said the act will bring disclosures “under a common legal standard and significantly expand the number of officials whose reports are available online.”
As of March, the group noted, the Office of Government Ethics had posted financial information on only 900 federal executives. Under the new law, thousands more will be required to post by August 2012, and agencies must present them in a searchable database by September 2013. Some 350,000 employees who currently file financial information privately to agency ethics officers will now be required to do so electronically.
Such work previously was left to nonprofit activist groups such as the Center for Responsive Politics' OpenSecrets.org and Judicial Watch's Judicial Financial Disclosure Project, according to the analysis.
“In addition, the bill enhances the content of financial disclosure reports by requiring timelier reporting of transactions and requiring a subset of top officials to report mortgages on personal residences,” OMBWatch said.
Many state governments already provide some online access to similar disclosures by officials; others, including Maryland, are considering following suit.