Compliance Comes to Capitol Hill
President Obama signed into law a bill tightening insider-trading rules on members of Congress and other government officials prohibiting them from profiting on material nonpublic information they gain access to during their employment.
The new legislation referred to as the STOCK Act, the Stop on Congressional Knowledge Act. The Act prohibits lawmakers, their families and staff, as well as other executive and judicial branch employees from trading stocks, commodities and futures based on private confidential information they gain access to during the scope of their employment.
Although, senior government officials must annually file public disclosures reporting their investment holdings and profits/losses, the new law creates additional restrictions and prohibitions.
Among others, lawmakers must report all trades valued at $1,000 or more within 30 days after they are informed of the transaction and no later than 45 days after the transaction occurred. The rule, however, does not apply to widely held investment funds and government issued bonds. Lawmakers cannot participate in initial public offerings that are not available to the general public.
In addition, the bill requires lawmakers and executive branch officials to disclose terms of mortgages on their homes. And it addresses Fannie Mae and Freddie Mac executives, prohibiting bonus paid to executives while the companies remain under government conservatorship. Finally, the law denies federal pensions to members of Congress who are convicted of felonies involving public corruption.