Klobuchar Joins Bipartisan Group of Senators to Introduce Bill Prohibiting Insider Trading by Members of Congress

Press Release

Date: Nov. 17, 2011
Location: Washington, DC
Issues: Trade

U.S. Senator Amy Klobuchar today joined a bipartisan group of senators to introduce legislation prohibiting members of Congress from engaging in insider trading. The STOCK Act redefines insider trading to include knowledge gained from Congressional work and service, creates rules and reporting requirements, and requires "political intelligence consultants" to register as lobbyists. The bill is similar to the legislation that Minnesota Congressman Tim Walz introduced last week.

"This is common sense legislation that will help strengthen our democracy,"Klobuchar said. "I hope my colleagues on both sides of the aisle will come together to support this important bill."

Currently, insider trading by members of Congress and their staffs is not prohibited by the Securities Exchange Act or Congressional rules. In addition to revising the statute to enable the Securities and Exchange Commission to prosecute cases of insider trading by members of Congress, like a similar version in the House of Representatives, this legislation would also make it a violation of the rules of the House and Senate to engage in such an activity. This creates more accountability so that anyone who uses their role as a member of Congress to enrich themselves would be answerable not only to the Department of Justice and the Securities and Exchange Commission, but also to Congress's own ethics rules.

The other senators introducing the legislation include Kirsten Gillibrand (D-NY), Marco Rubio (R-FL), Jon Tester (D-MT), Debbie Stabenow (D-MI), Claire McCaskill (D-MO), Dick Durbin (D-IL) and Richard Blumenthal (D-CT).

The Senate version of the STOCK Act will do the following:

Ban Insider Trading by Members of Congress

The legislation amends the definition of insider trading to include purchasing assets on the basis of knowledge of a legislative action gained from a member or employee of Congress or by virtue of being a member or employee of Congress. This would require the SEC and CFTC to make regulations to prevent such use and go after cases of insider trading by members of Congress.

Create New Reporting Requirements

The legislation amends Senate rules to make it a violation of the rules to provide information with the understanding that it will be used to buy or sell an asset or to use knowledge gained from Congressional work to buy or sell a stock or commodity. It would also require reporting within 90 days of a member or employee making a transaction of more than $1,000 to provide oversight of possible violations or inappropriate practices.

Require Registration of "Political Intelligence Consultants"

The legislation would require "political intelligence consultants" -- individuals contacting legislative and executive branch employees to acquire market intelligence regarding a proposed rule, regulation or legislation -- to register as lobbyists, and would make them subject to the same reporting requirements and other restrictions imposed on lobbyists.