House passes STOCK Act requiring disclosure by federal employees
Ethics office provides numbers on who would be affected by insider trading curb.
The House on Thursday overwhelmingly approved its version of the so-called STOCK Act, which aims primarily at curbing insider trading by lawmakers, but also includes a provision to extend disclosure requirements to thousands of federal employees.
The measure that will affect federal workers differs slightly from a similar provision in the Senate version of the bill. The final details must be worked out in conference. By a 417-2 vote, the House approved the Stop Trading on Congressional Knowledge Act, including language released Wednesday night by Majority Leader Eric Cantor, R-Va., that removed a contentious Senate provision that would have required so-called political intelligence consultants to disclose activities and to register as lobbyists. The bill now will go to a conference committee to resolve differences.
“We added a provision to prohibit members of Congress, executive branch officials and their staffs from receiving special access to initial public offerings due to their positions,” Cantor said in a statement before the vote. “We intend to act quickly to send the president a strengthened, workable bill that delivers on our promise to uphold the trust of the American people.”
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.
Confusion over how many federal employees would be required to disclose information emerged last week after an amendment from Sen. Richard Shelby, R-Ala., broadened the language to cover thousands more lower level federal employees. Under the 1978 Ethics in Government Act, high-level federal appointees must make their financial disclosures public, while a vaster universe of mid-level employees must disclose confidentially to their agency ethics officer.
The House version would cover only the smaller group of top officials. The staff director for the Senate Homeland Security and Government Affairs Committee on Feb. 6 sent a letter to the Office of Government Ethics seeking clarification on the legislation’s scope. According to a Feb. 8 reply from OGE Principal Deputy Director Don Fox, the number of high-level employees who in 2010 made their financial disclosures public was 28,019. The number of mid-level employees who disclosed confidentially was 363,771.
Requiring lawmakers and federal officials for the first time to disclose their stock grades has drawn support from government transparency advocacy groups. But Cantor’s changes, made before House passage, drew the ire of Melanie Sloan, executive director of Citizens for Responsibility and Ethics in Washington, who accused the House of “watering down” the bill.
“Rep. Cantor has opposed the STOCK Act from the start and his bill reflects that,” said Sloan. “The majority leader is talking out of both sides of his mouth. He is trying to take credit for finally responding to an issue that has outraged Americans, while behind closed doors he has taken the side of Wall Street and neutered the tough Senate bill.”
As the bill heads for conference, her group will push for inclusion of the disclosure requirements for political intelligence services and another Senate-only amendment that would give prosecutors new tools to identify, investigate and prosecute criminal conduct by public officials.