WASHINGTON, July 13 – On Monday, representatives heard testimony on the gaping loophole that allows members of congress and federal employees to cash in on insider information.
“Insider trading” lands everyone else in the U.S. – and in most industrialized countries – in jail and slaps them with huge fines, but a little-known loophole permits members of Congress, their staff and employees of the executive branch to buy and sell stocks using “insider” information they might obtain through their official work.
“As Congress and the federal government assume stricter oversight of Wall Street, the obscure fact that members of Congress, their staff and employees of the executive branch are not subject to majority of the laws against insider trading takes on real significance,” said Lisa Gilbert, the U.S. Public Interest Research Group’s Democracy Advocate in a letter submitted to the House Financial Services Oversight and Investigation subcommittee on Monday.
The subcommittee “Preventing Unfair Trading by Government Officials” hearing looked at both the recently alleged inappropriate trading by Securities and Exchange Commission (SEC) enforcement officials, and H.R. 682, the Stop Trading on Congressional Knowledge (STOCK) Act, a bill introduced by Reps. Brian Baird (D-WA) and Louise Slaughter (D-NY) to prohibit insider trading by Members of Congress or their staff.
“The opportunities to take advantage of insider information gleaned in day-to-day business for personal gain in the stock and commodities markets are obvious,” Gilbert said.
The STOCK Act would apply the same restrictions and laws that ordinary citizens face to Members, the staff of Congress, and the federal government.
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U.S. PIRG is the federation of state Public Interest Research Groups. State PIRGs are non-profit, non-partisan public interest advocacy organizations. For more on the Elections and Government Reform campaign, click here.
