Insider trading ban passes Senate

Posted By: Carolyn Lochhead
Mar 22 at 12:08 pm

SFGate.Com:

The so-called STOCK Act to ban insider trading by members of Congress, their staff and some administration officials, and speed up reporting of stock trades, passed the Senate 96-3 today and is on its way to President Obama’s signature.

The legislation was triggered by a 60-Minutes television report that focused on stock trades in VISA by House minority leader Nancy Pelosi’s husband Paul. Pelosi vigorously and credibly denied that she used her position to influence the trades.

Showing that she can be a master of spin, Pelosi managed to transform herself from the subject of an unflattering hit piece to champion of Congressional reform, first by confronting the 60-Minutes report and then by embracing the reform legislation, and blaming Republicans for trying to water it down.

The other irony is of course that Congress was never exempt from insider trading rules to begin with. Securities and Exchange Commission officials successfully persuaded Congress not to create a separate law for Congress, but to clarify the existing ban and speed up disclosures of stock trades. Currently members have to report annually, which makes insider-trading cases impossible to prove or even detect; the new legislation requires 30-day disclosure on a public and searchable web database. SEC officials said instant disclosure would be far preferable, but members objected to the paperwork burden.

Some members and advocacy groups, including Rep. Louise Slaughter, the New York Democrat who first sponsored the legislation several years ago, and Sen. Chuck Grassley, R-Iowa, pushed for registration of so-called political intelligence firms that disseminate information from Congress. That provision, which faced First Amendment problems, was not included.

The public outrage that erupted from the 60-Minutes report, some of it misinformed, ensured that the legislation would breeze through Congress, which was already beset by rock-bottom approval ratings. Proving insider trading has always been very difficult; Congress deals with so many matters that any stock trades hold potential for insider trading allegations.

Pelosi issued this statement: :”By passing the STOCK Act and sending it to the President’s desk, we strengthened the forces of reform in our political system. We began restoring trust between public servants and those we represent.”