Congress overdue on insider trading law
House Majority Leader Eric Cantor (R-Va.), discusses the Stop Trading on Congressional Knowledge Act, or STOCK Act, at the Capitol in Washington (Jan. 31, 2012). Credit: AP
With Washington and Wall Street vying for the bottom in public esteem, Congress is moving to make it clear that laws banning insider trading apply to its members, their relatives and staff. It's about time.
Lawmakers are subject to the insider trading laws that apply to other investors. But legislation would eliminate any ambiguity about the law's reach into the Capitol, and the Securities and Exchange Commission's enforcement authority. While allegations of insider trading by a few congressional leaders have been leveled in news reports, without transparency and enforcement, it's impossible to know if the law is being broken.
A bipartisan Senate bill that passed a key procedural hurdle Monday would prohibit members of Congress buying or selling stocks and other securities based on nonpublic information acquired through their congressional service. Members would be required to disclose transactions online within 30 days.
A similar House bill that has languished since 2006 now has 250 sponsors. House Majority Leader Eric Cantor (R-Va.) says he will move a version to a vote this month. Republicans want real estate transactions explicitly included. That's crucial, but expanding the bill -- for instance, to include executive branch employees -- shouldn't be an excuse for delay.
An insider trading ban alone won't do much to improve Congress' approval rating. But it would help address the gnawing suspicion that the nation's financial system is stacked in favor of establishment insiders.
