Report: STOCK Act database would put officials in danger

Disclosing financial information about senior government officials would create an "unwarranted risk to national security," according to a new government-mandated study that takes aim at the STOCK Act requirement.

The report argues that the new disclosure mandate passed by Congress would do next to nothing to help identify conflicts of interest, while posing security threats and making it difficult to attract talent to federal positions.

"The preponderance of the testimony presented by agency cybersecurity, national security, ethics, human resources and other experts supports the conclusion that posting personal financial information as required by the act does indeed impose unwarranted risk to national security and law enforcement, as well as threaten agency missions, individual safety, and privacy," the report stated.

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The report from the National Academy of Public Administration (NAPA) raises serious concerns with a key provision of the Stop Trading on Congressional Knowledge (STOCK) Act. That law was intended to curb insider trading by government officials, and included a provision that would require financial disclosures from senior government officials in a searchable, online database.

Critical argue the disclosure requirement could discourage people from working for the government and even expose officials to danger. The rules have been delayed multiple times.

NAPA said that "virtually all" the security experts they interviewed said the provision "fundamentally transforms" the ability of dangerous parties to exploit financial information about government employees for "criminal, intelligence, and other purposes."

The information "can be used to develop powerful profiles of individuals and organizations that can be reused and repurposed in damaging ways," they said.

The authors of the report cited a letter they received from the State Department, which warned that such online information would be used to "harass, compromise, and steal" from government employees.

"This information, which would be readily available to any and all, would provide a helpful roadmap for those wishing to target employees, particularly those who are relatively affluent or in difficult financial situations," the letter stated. "Falling into either category, seen through another culture's financial realities, would be enough to make our employees targets of opportunity."

Meanwhile, the report found that any benefits in terms of identifying conflicts of interest brought on by the online posting are "at best, negligible."

The study found that almost all government agencies have reported the requirement is making it harder to attract and retain talent. "Virtually all" agencies reported cases where senior executives subject to the new requirement were considering downgrades or retirement to avoid compliance, while others reported potential hires turning down positions once they learned of it.

Officials overall are worried about "serious, long-term negative consequences" for governmental hiring if the provision takes effect.

Currently, financial disclosures for the highest level of government employees, including the president, vice president, and members of Congress are made available, and only by written request. But under the STOCK Act provision, roughly 28,000 senior government officials would have to disclose their finances online.

NAPA recommended in its report that the government continue to implement other STOCK Act provisions, such as requiring reports on financial transactions and allowing electronic filing of disclosure reports.

Sen. Tom Carper (D-Del.), who chairs the Senate Homeland Security and Governmental Affairs Committee with oversight over the law, said he was reviewing the report and considering possible changes to the law.

"I am aware of a number of serious safety concerns that have been raised about some of the law’s provisions," he said in a statement. "I intend to give the panel’s findings and recommendations very serious consideration and hope my colleagues do the same as we determine the appropriate next steps for STOCK Act implementation."

Congress has twice passed legislation to delay implementation of this provision, most recently in December. The provision is currently set to take effect on April 15. The first delay also required NAPA to study the provision, resulting in Thursday's report.

Groups representing federal workers have harshly criticized the provision and have called for its delay, if not outright repeal.

— Updated at 5:53 p.m.