In November, a CBS 60 Minutes expose reported on the unfortunate
practice of Members of Congress using their influence and power to make a
profit with non-public information. While the Securities in Exchange
Act of 1934 banned insider trading on Wall Street, its application to
elected officials is often disputed.
For example, if an individual on Wall Street knows that a company is
set to gain a big contract, it is illegal - and unethical - to buy stock
in that company before the contract is finalized and public. Why should
Members of Congress be able to make financial decisions before
government contracts are awarded or bills are considered for a vote?
Wall Street is governed by and punishable under the Securities in
Exchange Act of 1934. Though the Code of Ethics for Government Service
clearly states that no person in government service should "use any
information coming to him confidentially in the performance of
governmental duties as a means for making private profit", it's time for
Congress to take strong action and impose strict penalties for those
that violate the public trust.
During his State of the Union Address, I was pleased to hear
President Obama urge passage of the Stop Trading on Congressional
Knowledge (STOCK) Act, which passed the United States Senate this week.
Last fall, I signed on to this legislation as a co-sponsor, because I
firmly believe that Congress and its employees should never be above the
While I am glad that legislation banning insider trading has gathered
such strong support from both sides of the aisle, I am deeply
disappointed that it is necessary in the first place.
A 2011 study
showed that stocks owned by members of the House of Representatives
outperformed the market average by 6% between 1985 and 2001. A similar study
conducted in 2004 found that stocks owned by members of the Senate
outperformed the market average by an astounding 12% between 1993 and
1998. While no one should be able to dictate where an individual chooses
to invest his or her money, we should insist upon high ethical
standards, especially for those who serve the people.
The STOCK Act rectifies this issue by prohibiting all federal
employees, including Members of Congress, from using nonpublic
information for personal benefit. The bill takes a step toward full
transparency, requiring that all Representatives publish all
transactions of stocks, bonds and other securities, to their website.
During this session, the STOCK Act has already garnered 273
bipartisan cosponsors. With Americans growing increasingly frustrated
with Congress - and I join them in that frustration - I hope that we can
get this bill to the President's desk quickly.
Representative Mike Michaud