WASHINGTON, D.C. — Members of the Senate and their staff would be required to divest themselves of any individual stock holdings or put them in a blind trust under a bill announced by U.S. Sen. Sherrod Brown (D-OH) today. Brown outlined why the Putting the People’s Interests First Act of 2012 would strengthen efforts – like the Stop Trading on Congressional Knowledge Act of 2012 or “STOCK Act” – aimed at preventing Members of Congress from using insider trading to make money on the stock market. Brown has offered this bill as an amendment to the STOCK Act, legislation being debated on the Senate floor this week.
“Members of the House and Senate should focus on serving their constituents, not their stock portfolios. While the STOCK Act is an important step, we can draw an even clearer line by preventing Senators from voting on issues that affect their financial investments,” Brown said. “Members of Congress not only have the privilege of serving, but they are compensated well for it. There’s no reason they need to be in the business of buying or selling stocks that could be influenced by their actions.”
“American democracy depends upon the public trusting that their representatives will the act in the public interest,” the bill’s cosponsor, U.S. Sen. Jeff Merkley (D-OR), said. “We should do everything in our power to eliminate conflicts of interest. We need a bright line separating personal interest and the public interest – members shouldn’t be holding individual stock that could be affected by the votes we take on the floor of the Senate.”
While Senate Ethics Rules require committee staff members making more than $25,000 per year to “divest himself of any substantial holdings which may be directly affected by the actions of the committee for which he works,” the same rule does not apply to Members of Congress. Federal regulations and federal criminal law also prohibit Executive Branch employees, their spouses, and children from owning stock in companies that they regulate, but the prohibition is not extended to Members of Congress who make laws affecting publicly-traded companies. Brown outlined how the Putting the People’s Interests First Act of 2012 would ensure that the same financial conflict of interest rules that apply to Senate committee staff and to Executive Branch employees also apply to Members of Congress.
The Putting the People’s Interests First Act of 2012 would align the rules for members of the Senate with those that apply to committee staff and Executive Branch employees by:
- Prohibiting members of the Senate and staff from owning (and requiring them to divest themselves of) individual stock in, or short selling, companies directly affected by their official duties; and
- Permitting Senators and staff to invest in broad-based funds and place their assets in blind trusts, as permitted by the SASC rule and federal regulations.
In President Obama’s State of the Union Address last week, President Obama called for a bill to ban insider training and promised to sign legislation as soon as it passed through Congress.