One of the policies President Barack Obama pushed for in his State of the Union address was further tightening the restrictions on insider trading among members of Congress. It appears that Congress has taken notice, and Obama seems to approve of their efforts thus far.
Sen. Joe Lieberman, ID-Conn., introduced a bill last Thursday, the Stop Trading On Congressional Knowledge Act, or STOCK Act. The bill would prohibit federal lawmakers from trading stocks based on nonpublic information on companies they learn in the course of their Congressional duties. The bill, which recently advanced past debate in the Senate, would also require all stock transactions by members of Congress to be reported within 30 days.
Not surprisingly, Obama indicated in a press release from his Office of Budget and Management, that he “strongly supports” the bill. More interestingly, he noted that the bill would also lead to a report on the role of political intelligence in financial markets, including the sale of political information, the ethical and legal concerns of such sales, and the merits of imposing disclosure agreements on people involved with political intelligence activities.
While it seems obvious that Congress should not be allowed to trade on information only they have, and that they should be obligated to disclose any potential conflicts of interest with regards to stocks they own, this report could have an interesting impact on the significant number of senators and representatives who become lobbyists after they leave office. Perhaps it will lead to tighter rules on these sorts of lobbyists, or perhaps not, but it will be worth watching if the bill passes.
– Benjamin Nanamaker, InvestorPlace Money & Politics Editor
The opinions contained in this column are solely those of the writer.
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