News Release

Congressional Insider Trading Ban Exempts Lobbyists

The Washington Post reports today: “Congress’ low approval ratings have sparked a rare instance of bipartisanship, as both parties are rushing to pass a bill that would make it clear that insider trading laws apply to lawmakers. The Senate voted 93-2 Monday to clear the way for consideration of amendments and — sponsors hope — final passage later this week.”

LISA GILBERT, CRAIG HOLMAN, cholman at citizen.org also via Barbara Holzer, bholzer at citizen.org,
Public Citizen said in a statement today: “The ‘Stop Trading on Congressional Knowledge Act’ (STOCK Act), would make members of Congress and their staffs subject to the same laws against insider trading that apply to the rest of America. The STOCK Act also creates an important system of real-time transparency of stock trading activity by members and staff.

“These steps alone make the legislation worthwhile. However, the measure being considered has been narrowed. It should include lobbyists and others.”

Holman, government affairs lobbyist for Public Citizen, said: “There exists a shady cottage industry of lobbyists and trade dealers who are taking advantage of the fact that the insider trading law has not been applied to Congress. These political intelligence consultants roam the halls of Congress and tap into their networks for non-public information that they then use to enrich themselves or their clients in the stock market. Unfortunately, political intelligence consultants have been exempted from the Senate version of the STOCK Act.”

Public Citizen added in their statement: “The ‘political intelligence’ provision in the original bills does not prevent lobbyists and traders from keeping abreast of legislative trends on Capitol Hill. It merely requires that they disclose their clients and trading activity, so that the law against using non-public material information for illegal insider trading can be properly enforced. This provision needs to be reinstated.”

Gilbert, deputy director of Public Citizen’s Congress Watch division, said today: “The American people will remain outraged at the prospect of congressional insider trading until members of Congress make clear that insider trading is illegal for themselves and everyone who conducts business with Congress. Some are suggesting that so-called ‘blind trusts’ for members of Congress would suffice. But those trusts often don’t work the way they should, and they can easily be managed by political intelligence consultants, enriching their congressional clients by trading on non-public material information.”

Read Public Citizen’s letter to the Senate supporting passage of a strong and effective STOCK Act.

Note: On Monday, Public Citizen “will host a discussion with Jack Abramoff, the disgraced former lobbyist who was convicted in 2006 on charges of fraud, corruption and conspiracy, most notably bilking millions of dollars from Native American tribes who hired him to help obtain gambling rights. Since his release from prison in 2010, Abramoff has been speaking out against his former occupation, now characterizing the lucrative lobbying industry as a euphemism for legalized bribery.” More information on the event.