The chief association for career federal executives has come out against portions of legislation aimed at cracking down on insider trading by lawmakers, saying the so-called STOCK Act that has cleared both chambers of Congress would “unnecessarily and detrimentally affect career senior executives.”
The STOCK 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. It would require disclosure 30 days after any securities trade of more than $1,000 and would compel all disclosures to be available electronically.
In the past two weeks, versions of the bill that cleared the Senate and then the House contained amendments broadening the disclosure requirements to cover thousands of executive branch employees in addition to those working on Capitol Hill.
In a Feb. 16 letter to Senate Majority Leader Harry Reid, D-Nev., and Minority Leader Mitch McConnell, R-Ky., the top leaders of the nonprofit Senior Executives Association said their group “is unaware of instances where career senior executives have been subject to insider trading accusations.”
Association President Carol A. Bonosaro and General Counsel William Bransford wrote that while they can’t guarantee there haven’t been transgressions, “we believe that overall, career senior executives have little desire or opportunity to engage in the activities addressed by the legislation.”
Current requirements that senior executives complete annual financial disclosure reports using Form 278 from the Office of Government Ethics are sufficient, the association argued. The SEA officials also warned of challenges in the legislation’s plan for a new disclosure website to be maintained by the ethics office, saying the site would threaten privacy and consume too many resources. Additionally, Bonosaro and Bransford expressed concern that many senior executives could “run afoul” of the law without knowing it because their financial adviser might not alert them to recent trades within the requisite 30-day time frame.
“Overall, SEA believes that such extensive, burdensome and public reporting requirements will have a chilling effect on those employees considering entering the SES,” they wrote. “We question why anyone would want to subject themselves to such broad, unnecessary scrutiny.”