STOCK Act passes Senate, Obama (Hopefully) to Sign

[TakeAStepBack]

Congratulations, STOCK Act. You'll Be a Law!

By Rich Smith | Motley Fool
March 23, 2012

t's official. On Thursday, March 22, 2012, the U.S. Senate passed by near unanimous vote a bill to Stop Trading On Congressional Knowledge. A bill that (in theory at least) will put an end to members trading stocks with the use of inside information, known to them from their work as representatives -- but unknown to most of the people they were elected to represent.

Six years in the making, the bill died three times in committee, got sidelined in the House in 2011, and was assaulted by a horde of mutant amendments in the Senate in early 2012. But it survived. After winning with landslide votes in both the Senate and House in February, the STOCK Act was adopted by a 96-3 vote in the Senate yesterday, and now heads to President Barack Obama's desk for signing.

The lowdown on the STOCK Act
What does the STOCK Act do? Basically, it boils down to three big things:

First and foremost, the act explicitly states that members have a duty to the United States and its citizens, and to the institution of Congress itself, to keep confidential any material information they come into possession of in the course of performing their duties. That sounds like a "well, duh!" statement to most of us, but legal scholars have been debating for years whether such a duty actually exists in law.

Now we know it does, because the law says it does. As a result, the entire history of SEC regulation of insider trading can now be applied in full to members of Congress.

Second, the act forbids public officials, including members of Congress, from using their government office to obtain preferential access to hot IPOs.

Third, to help voters ensure that Congress is doing what it's now legally obliged to do (and not do the things it's now legally forbidden from doing), the act requires members of Congress (and senior members of the executive branch) to disclose their trading activity within 30 days after placing a trade. That's different than the current disclosure requirement, which had trades and disclosures being separated by as much as 17 calendar months. Further improving the system currently in place, these disclosures will need to be made electronically, in standardized form, and will be open to the public for review.

This is both good news for the public and good news for traders/investors. It's missing some components that I would have liked to see pass through (more in the article), but with so little accomplished for the people these days and rampant partisanship, I'm glad to see this get done.

Now, hopefully Obama will sign it.

 

[TakeAStepBack]

Bill Text - 112th Congress (2011-2012) - THOMAS (Library of Congress)

Here is the actual bill.

 

[nitroz]

Well, it's ONLY Illegal now? We shouldn't stop here. It sounds too good to be true, but we need proof that it works. We need to see congress members thrown in jail for their actions. They only passed this because of their approval ratings.

We need enforcement!
All the republicans were against this and had it watered down so there are loopholes and where they can't actually get in trouble. They will get rich one way or another. We need to find better ways to throw them in the slammer.

 

[Rozman]

It's a feel good thing...
I wonder who will monitor it.
Who will enforce it...
Everyone will be focusing on other things
24 hrs after this is signed into law.
Just another thing for Obama to pat himself
on the back for.

 

[Zander]

That's it....there's no way I am going to be a Senator now.....

 

[TakeAStepBack]

Well, it's ONLY Illegal now? We shouldn't stop here. It sounds too good to be true, but we need proof that it works. We need to see congress members thrown in jail for their actions. They only passed this because of their approval ratings.

We need enforcement!
All the republicans were against this and had it watered down so there are loopholes and where they can't actually get in trouble. They will get rich one way or another. We need to find better ways to throw them in the slammer.

Oh, jeezus. I should known someone would turn this bill into partisanship. The bill got overwhelming support from both sides. Read the bill.

 

[Meister]

I have a feeling there is a backdoor to this bill. I just don't see the politicians giving this crime up with such bipartisanship.

 

[Ropey]

I have a feeling there is a backdoor to this bill. I just don't see the politicians giving this crime up with such bipartisanship.

I have no doubt that there's a few slippery slopes.

The Senate voted 96 to 3 to pass a watered-down STOCK Act, which would bar members of Congress, their staff and some federal workers from profiting from non-public information obtained through their jobs.

STOCK Act passes Congress, heads to Obama’s desk

 

[konradv]

Well, it's ONLY Illegal now? We shouldn't stop here. It sounds too good to be true, but we need proof that it works. We need to see congress members thrown in jail for their actions. They only passed this because of their approval ratings.

We need enforcement!
All the republicans were against this and had it watered down so there are loopholes and where they can't actually get in trouble. They will get rich one way or another. We need to find better ways to throw them in the slammer.

Oh, jeezus. I should known someone would turn this bill into partisanship. The bill got overwhelming support from both sides. Read the bill.

So is using the word "hopefully" in thread title, as if there were an actual question.

 

[TakeAStepBack]

He hasn't signed it yet. Therefore it is still in question on whether it is signed. Period.

 

[TakeAStepBack]

I have a feeling there is a backdoor to this bill. I just don't see the politicians giving this crime up with such bipartisanship.

Of course there will be no legal recourse should they breach the law. But at least it moves to say that congress is bound by SEC regulation and post trades within 30 days in a public forum. The idea is there is no more question whether or not they are bound by law on insider trading. They are.

Sure, it doesn't go the full length of the field as I would have liked to see and they pulled some portions that should have remained. But in the end, it's more than we had before the bill was introduced and even if it's ceremonial, it appears to hold accountability. Better than nothing.

 

[Claudette]

Jesus. Pelosi must be pissed as hell.

 

[Ernie S.]

He hasn't signed it yet. Therefore it is still in question on whether it is signed. Period.

At 96-3 in the Senate and like support in the House, the President's signature is a moot point. His veto would be overridden in about 30 seconds and he would look like a bigger fool than he does now.
One thing for sure though. He will try to take credit.

 

[Conservative]

Well, it's ONLY Illegal now? We shouldn't stop here. It sounds too good to be true, but we need proof that it works. We need to see congress members thrown in jail for their actions. They only passed this because of their approval ratings.

We need enforcement!
All the republicans were against this and had it watered down so there are loopholes and where they can't actually get in trouble. They will get rich one way or another. We need to find better ways to throw them in the slammer.

Then why are the Democrats supporting it, dipshit, if it's all watered down?

FAIL

 

[Ropey]

Well, it's ONLY Illegal now? We shouldn't stop here. It sounds too good to be true, but we need proof that it works. We need to see congress members thrown in jail for their actions. They only passed this because of their approval ratings.

We need enforcement!
All the republicans were against this and had it watered down so there are loopholes and where they can't actually get in trouble. They will get rich one way or another. We need to find better ways to throw them in the slammer.

Then why are the Democrats supporting it, dipshit, if it's all watered down?

FAIL

Watered down soup is still soup.

Sometimes you just have to take what you get and hope that your own loopholes are in place. It's politics.

 

[Nova78]

Like that will stop all those crooks in government ,that is like passing a law to ban smoking weed.

 

[Meister]

It's a feel good thing...
I wonder who will monitor it.
Who will enforce it...
Everyone will be focusing on other things
24 hrs after this is signed into law.
Just another thing for Obama to pat himself
on the back for.

I knew there was a back door to this bill and the back door is that even though it's against the law, they will not be prosecuted because of "congressional immunity". So there it is.

 

[Immanuel]

Although it sounds like a good thing, I just have to wonder why the trading of stocks and bonds based upon knowledge of Congressional action would not already be considered "insider trading". I don't think that insider trading only covers people who have information from the "inside" of a corporation but it also covers people who attain this knowledge about outside information that the general public as not yet been privy to.

Definition:
Insider trading occurs when someone makes an investment decision based on information that is not available to the general public. In some cases, the information allows them to profit, in others, avoid a loss. (In the Martha Stewart - ImClone scandal, the latter happened to be the case.)

What constitutes Insider Trading?
Just what constitutes insider trading? The question is much trickier than it seems. In order for the SEC to prosecute someone for insider trading, they must prove that the defendant had a “fiduciary duty” to the company and / or intended to personally gain from buying or selling shares based upon the insider information. This test of duty, however, was significantly weakened by the Supreme Court's United States vs. O'Hagan ruling. In 1988, James O'Hagan was a lawyer at the firm of Dorsey & Whitney. After the firm began representing Grand Metropolitan PLC, which planned to launch a tender offer for Pillsbury, Mr. O'Hagan acquired a large number of options in the company. Following the announcement of the tender offer, the options soared, resulting in a four million dollar gain. After being found guilty on fifty-seven charges, the conviction was overturned on appeal. The case eventually found its way to the Supreme Court where the conviction was reinstated (for more information, read Getting the Appropriate Misappropriators: An Analysis of the Supreme Court's Decision in United States vs. O'Hagan).

Insider Trading - Definition, History, and Punishment

emphasis added

I suppose what might release congress members from being charged with a crime might be the idea that they have no fiduciary duty to the company although I am not certain that is correct.

Immie

 

[Meister]

I also have to wonder about congress buying stock well in advance and then vote on policy that could allocate funds to a corporation or to a sector for that matter that would boost the price of stock for a corporaton or to a whole sector.
Al Gore talking up global warming made him a rich man with his sector investments.

 

[Ropey]

It's a feel good thing...
I wonder who will monitor it.
Who will enforce it...
Everyone will be focusing on other things
24 hrs after this is signed into law.
Just another thing for Obama to pat himself
on the back for.

I knew there was a back door to this bill and the back door is that even though it's against the law, they will not be prosecuted because of "congressional immunity". So there it is.

I remember talking with you about this very thing. We didn't know what it was back then but we knew it would be a very LARGE back door.

It is...