By Vicki Needham - 11/18/11 07:41 PM EST
A bipartisan group of eight senators introduced a bill Friday that would prohibit lawmakers from using information gleaned during their congressional work for financial gain.
The lawmakers are urging passage of a measure that redefines insider trading to include knowledge gained from congressional work. It would also require “political intelligence consultants” to register as lobbyists.
“The American people deserve the right to know their lawmakers' only interest is what's best for the country, not their own financial interests,” said Sen. Kirsten Gillibrand (D-N.Y.) in a statement.
“Members of Congress should not have a different set of rules, they should be treated the same as everyone else. This is not a Democratic or Republican idea, it is just a good idea that can create wide bipartisan support," Gillibrand said.
The senators said members of Congress and their staff are not prohibited by law or by congressional rules from using private information to invest in and trade stocks.
The measure would enable the Securities and Exchange Commission (SEC) to prosecute cases of insider trading by lawmakers, similar to a bill in the House, and make it a violation of the rules of the House and Senate to engage in such an activity.
The Senate measure aims to create more accountability so that anyone who uses their role in Congress for financial gain would have to answer to the Justice Department, SEC and congressional ethics rules.
“This law makes crystal clear that members of Congress must not be exempt from laws everyone else has to follow,” Stabenow said. “Any member of Congress abusing his or her position for financial gain must be held accountable," she said.
"Congress needs to fix this glaring inequity immediately.”
On Thursday, House Financial Services Committee Chairman Spencer Bachus (R-Ala.) announced that his panel would consider legislation introduced by Reps. Louise Slaughter (D-N.Y.) and Tim Walz (D-Minn.) at a Dec. 6 hearing. That bill would prohibit members and White House employees from investing based on private information or from passing that information along to others for investment purposes.
That legislation was introduced earlier in the 112th Congress but languished until a report aired Sunday on CBS’s “60 Minutes” based on a new book that questions the stock-trading habits of lawmakers.
Bachus was one of the lawmakers who came under scrutiny in the report for allegations that he made profitable trades based on knowledge gleaned from meetings during the financial crisis. He launched a spirited defense, telling the book's publisher in a letter that the claim was a "total lie.”
The “60 Minutes” report also scrutinized moves made by Speaker John Boehner (R-Ohio) and Minority Leader Nancy Pelosi (D-Calif.), who also defended their actions.
"Existing law clearly prohibits insider trading by members of Congress. However, the American public deserves for there to be no question or equivocation concerning members of Congress or any citizen being exempted from laws prohibiting insider trading," Bachus said in a statement.
Senate Homeland Security and Governmental Affairs Chairman Joe Lieberman (I-Conn.) and panel ranking member Susan Collins (R-Maine) announced Wednesday they will hold a hearing on the issue, which has been stuck in Congress for more than five years.
Sen. Scott Brown (R-Mass.) has introduced a similar bill.
The legislation introduced Friday 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 Commodity Futures Trading Commission (CFTC) to create new rules and pursue cases of insider trading by lawmakers.
The measure also 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.
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.
This story was updated at 5:40 p.m.