Congressional insider trading is a real problem, even if it’s perceived as being more widespread than it actually is, senators of both parties said on Tuesday.
Sen. Kelly Ayotte (R., N.H.) said the issue deserves investigation. “I’d like to have us have hearings on this issue, and understand more about what is happening here — take the reports and follow up and do more thorough analysis, and at that point, we could better assess whether we need to pass some prohibitions around here,” she said, adding that she does not trade stocks. “No member of Congress should get a special advantage because they’re here. That’s just common sense.”
Sen. John McCain (R., Ariz.) said representatives and senators should be careful to keep from appearing as if they are engaged in insider trading. “I think it’d be wise of us to have legislation that would prevent that kind of thing from happening,” he said. “I’m not saying they did anything wrong, but appearances obviously matter around here.”
“I think, you know, we could drive our approval rating down from nine to five,” he added, laughing. “The good news is, we don’t have much further to go.”
Democratic senators expressed concern as well.
“I don’t think people should trade, certainly not on inside information,” said Sen. John Kerry (D., Mass.). “I think there ought to be a law.”
When asked if he believed senators and representatives should be prohibited from trading stocks, he said, “I think there ought to be some guidelines and some protections against the use of inside information, period.”
Sen. Barbara Boxer (D., Calif.) said she also thinks the concerns about insider trading are legitimate, though she hadn’t thought about a specific way to solve the problem.
Boxer’s colleagues, on the other hand, have given it some thought, and are taking action:
Sens. Scott Brown, R-Mass., and Kirsten Gillibrand, D-N.Y., today are introducing the Stop Trading on Congressional Knowledge (STOCK) Act of 2011, which would prohibit members or employees of Congress, as well as executive branch employees, from using nonpublic information obtained through their public service for investing or any attempt at personal financial gain.
Like everyone else, members of Congress are subject to current insider trading laws. However, current insider trading laws do not apply to nonpublic information about current or upcoming congressional activity — that’s because members of Congress aren’t technically obligated to keep that information confidential.
So, for instance, if a lawmaker learns an upcoming bill will grant a company a large government contract, which could boost that company’s stock, he or she is free to buy that stock ahead of the bill’s public introduction. This form of “insider trading” is one of the reasons why there are so many wealthy members of Congress, CBSNews.com reported earlier this year.
Democratic Reps. Louise Slaughter of New York and Tim Walz of Minnesota introduced legislation in the House to stop this practice — but the bill, which has been introduced before, has never had more than 14 congressional sponsors. Now, however, there is more interest in the bill after a “60 Minutes” report shedding new light on congressional “insider trading.”