Senators propose rules stopping insider trading by Congress members

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 GillibrandKirsten GillibrandSanders, not Trump, is the real working-class hero Dem senator predicts Gorsuch will be confirmed A guide to the committees: Senate MORE (D-N.Y.) in a statement. 

The other seven proposing the bill were Sens. Marco RubioMarco RubioAt CPAC, Trump lashes out at media Conquering Trump returns to conservative summit Rubio brushes off demonstrator asking about town halls MORE (R-Fla.), Jon TesterJon TesterPoll: Senate should confirm Gorsuch A guide to the committees: Senate GOP loses top Senate contenders MORE (D-Mont.), Debbie StabenowDebbie StabenowA guide to the committees: Senate Trump's pick to lead Medicare won't say if she supports negotiating prices with drug companies Overnight Finance: Fed chief tries to stay above partisan fray | Bill would eliminate consumer agency | Trump signs repeal of SEC rule on foreign payments MORE (D-Mich.), Claire McCaskillClaire McCaskillThe DNC in the age of Trump: 5 things the new chairman needs to do A guide to the committees: Senate Juan Williams: Senate GOP begins to push Trump away MORE (D-Mo.), Amy KlobucharAmy KlobucharDrug importation won't save dollars or lives Senators ask feds for ‘full account’ of work to secure election from cyber threats Sanders, not Trump, is the real working-class hero MORE (D-Minn.), Dick DurbinDick DurbinDems rip Trump administration for revoking Obama's transgender directive A guide to the committees: Senate McConnell: I’m very sympathetic to 'Dreamers' MORE (D-Ill.) Olympia Snowe (R-Maine) and Richard BlumenthalRichard BlumenthalPoll: Senate should confirm Gorsuch A guide to the committees: Senate Senate Dems ask DHS inspector general for probe of Trump’s business arrangement MORE (D-Conn.).

“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 BachusSpencer BachusSpencer Bachus: True leadership The FDA should approve the first disease-modifying treatment for Duchenne Muscular Dystrophy Study: Payday lenders fill GOP coffers MORE (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 BoehnerJohn BoehnerHouse markup of ObamaCare repeal bill up in the air Conservatives to Congress: Get moving Boehner: ObamaCare repeal and replace 'not going to happen' MORE (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 CollinsSusan CollinsLeaked ObamaCare bill would defund Planned Parenthood GOP lawmaker at town hall calls on Trump to release his tax returns GOP senator won't vote to defund Planned Parenthood MORE (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.