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Federal insider trading ban delayed

Democratic US Senator Kristen Gillibrand at her office

Democratic US Senator Kristen Gillibrand at her office in Washington DC. (Feb. 15, 2012) Credit: Newsday/J. Conrad Williams, Jr.

WASHINGTON -- The new law banning federal insider trading -- a top achievement for Sen. Kirsten Gillibrand (D-N.Y.) -- was postponed last week out of fears it would inadvertently expose spies and put diplomats, prosecutors and military officials in jeopardy.

As Congress left for the August recess late Thursday, the House and Senate by voice vote delayed until Sept. 30 the implementation of the STOCK Act's requirement that financial statements and reports of stock deals by lawmakers, their families and staff -- and upper-level federal employees -- be posted online.

In calling for a delay, lawmakers cited a July letter by 14 former national security officials that said online posting of the finances of federal employees in military, diplomatic, law enforcement and intelligence jobs would be "a jackpot for enemies," and could jeopardize the safety of the workers and their families.

The STOCK Act was passed and signed into law earlier this year to bar members of Congress, their families and staff from profiting from inside information gleaned from their work.

Original versions of the bill, including one sponsored by Gillibrand, barred lawmakers and employees from insider trading but required online posts of finances only for lawmakers, their families and staff.

But Sen. Richard Shelby (R-Ala.) and House Majority Leader Eric Cantor (R-Va.) won passage of a version that extended online disclosure to employees, said Craig Holman, a lobbyist for the government watchdog group Public Citizen.

The law allows the Office of Government Ethics to exclude employees or classes of workers from the online disclosure, but no one is sure what the office will do, Holman said.

Senior federal employees now file financial reports on paper, and members of the public can request copies, but must identify themselves first.

Four employee associations and seven employees filed a federal lawsuit Thursday to block online posts of their finances.

"At the gut level, I'm suing because my privacy is being invaded for no good reason," said Joshua Zimmerberg, a neuroscientist at the National Institutes of Health, who said he was speaking as a private citizen.

Zimmerberg said since 1990 he has been filing paper financial disclosure forms that are reviewed by ethics officers, and that the law will drive away talented scientists, make his family vulnerable and add burdensome paperwork.

Gillibrand said she commended her colleagues for pausing to find "a common sense solution" to a requirement for employees that she had opposed. She added, "I am greatly disappointed the online publication of reports by members of Congress that I fought so hard for has been delayed by 30 days."

Meanwhile, Congress overrode a House Ethics Committee interpretation of the law that excluded lawmaker's spouses and families from the trading ban.

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