Sen. Kirsten Gillibrand, D-N.Y., authored legislation that now requires members of Congress to post their stock transactions online.
(Photo: Alex Wong, Getty Images)
WASHINGTON - Members of Congress are now posting their stock transactions online on a regular basis to comply with a law enacted 11 months ago to curtail illegal insider trading by lawmakers and their staffs.
The "periodic transaction report" filings are receiving scant public attention, but their most important audience - the Securities and Exchange Commission and the Office of Congressional Ethics - is watching.
Requiring lawmakers to post financial transactions of at least $1,000 or more within 30 days is intended to alert the watchdogs if lawmaker or senior employees are illegally exploiting insider knowledge of industries or the inner workings of federal agencies.
The new requirements are part of the Stop Trading on Congressional Knowledge (STOCK) Act, which became law last April "to restore people's faith in their elected leaders by ensuring we play by the exact same set of rules as every other American,'' according to Sen. Kirsten Gillibrand, D-N.Y., one of the act's lead authors.
"I am pleased that this legislation has gone into effect and that members of Congress now must play by the same rules as everyone else," Gillibrand said in a statement.
No lawmakers or staffers have been cited for violating the act, but one senior congressional staffer said a few colleagues who had been frequent stock traders have switched to mutual funds, which are exempt from the new requirement.
Some brokerages issue reports to customers quarterly rather than monthly, adding to the difficulty of complying with the STOCK Act.
The trading data is available on separate House and Senate websites, but is not yet in an easily searchable format.
A separate STOCK Act provision requiring that federal agencies post annual financial disclosure forms for 28,000 senior employees has been delayed three times because of privacy concerns. Those employees also are required to report financial transactions of at least $1,000 within 30 days.
The employees include overseas embassy officials, senior military officers, FBI investigators and immigration court judges, according to Arthur Spitzer, legal director for the American Civil Liberties Union of the Nation's Capital.
The ACLU joined several federal employees and their professional associations in a federal lawsuit last summer seeking to stop the new public disclosure requirement. The organization noted in court papers that the employees already are subject to ethics rules that include an internal review of their annual financial disclosures.
"People divest all the time because they are told it's a conflict of interest,'' Spitzer said. "It's my understanding, there isn't a similar system for Congress.''
The ACLU has not taken a position on the prime focus of the legislation, which is to provide greater scrutiny of members of Congress and their employees.
Federal civil servants were added as a Senate amendment during floor debate, and congressional committees never held hearings to consider the implications of the move.
"There are multiple ways people can be harmed,'' Spitzer said. He cited the example of federal employees working overseas who could be targeted for kidnapping based on their financial worth.
"There are countries in the world where kidnapping for ransom is epidemic," he said
Scam artists, unscrupulous stock brokers and identify thieves also could target the federal employees, Spitzer said.
Congress recognized the potential pitfalls and has voted three times to delay implementation for executive branch employees, with the latest deadline set for April 15.
A report scheduled for release March 28 by the National Academy of Public Administration on the national security and personal privacy issues involved in public disclosure may sway Congress to enact another delay.
And lawmakers appear certain to revisit the issue.
One of the authors of the STOCK Act, Democratic Rep. Louise Slaughter of New York, said she intends to reintroduce legislation that would add reporting requirements for people who engage in gathering political intelligence.
A provision of the STOCK Act that would have included such people was dropped from the bill by House Republican leaders, who inserted language that instead required the Government Accountability Office to study the issue. That report is due next month.
In the meantime, Slaughter said she's pleased to see the new law working. She recently filed a periodic transaction report to disclose her Feb. 15 purchase of Proctor & Gamble stock valued between $1,000 and $15,000.
(Copyright © 2013 USA TODAY)