Saturday, July 21, 2012
STOCK Act Has A Giant Loophole
Last April, Congress passed the Stop Trading On Congressional Knowledge Act (STOCK Act) and it was signed into law by the president on April 4th. It was hoped that this new law would put an end to the congressional insider trading. But it seems that the House of Representatives shifted some language around in the bill when it came to them, and the result was to leave a loophole in the law big enough to drive an armored truck through. Here's how CNN describes it:
The STOCK Act requires that any trades of $1,000 or more made on or after July 3 have to be reported to the House and Senate within 45 days. But the House and Senate have two completely different interpretations of that rule.
In the Senate, the Ethics Committee released one page of guidelines last month ruling that members and their spouses and dependent children all have to file reports after they make stock or securities trades. But the House Ethics Committee disagreed.
Its 14-page memo notifies House members and aides covered by the law that their spouses and children aren't covered. The Office of Government Ethics, which oversees all federal executive branch employees, sided with the House, informing its employees that their spouses and children don't need to file these periodic reports. . .
Robert Walker, a Washington ethics attorney and former chief counsel for both the House and Senate Ethics Committees, explained that the Senate bill did include a provision that covered spouses and children, but when Cantor's office wrote the House version, this language was shifted to a different section of the bill. The change meant that spouses and dependent children weren't subject to the new reporting requirements.
"The House recrafted some of the provisions of it and moved some of the provisions around. In that process, some of the Senate bill that applied to filing of these new reports was moved from one section of the bill to the other," Walker said.
The Senate Ethics Committee decided to stick with the spirit of the law that senators originally intended, but the House Ethics Committee went with the letter of the law, which included the loophole not requiring spouses and children to report financial transactions in a timely fashion.
I guess we should have known that the politicians wouldn't really kill their golden goose. This loophole allowing spouses and children to ignore the new law makes the law worthless. All any politician has to do is just let his/her wife/husband or adult child make the trades, and he/she can keep right on collecting those golden eggs from insider trading.
The House has now been embarrassed by CNN's discovery of the giant loophole, and Majority Leader Cantor is saying they will look "at ways to fix it". I'm not going to hold my breath until they fix the loophole, and I suggest you don't either. They're not going to be in any hurry to kill the illegal golden goose they so carefully and deviously protected.
This makes me wish we could just toss out every single House member and start over. They knew what they were doing, and if any of them opposed it they could have yelled loud enough for the media to take notice. But they didn't. They just tried to pull a fast one on the American people -- and it looks like they succeeded.