A new report has found that 14 members of Congress have been violating the STOCK Act and handle their finances in a way “that could expose them to ethical problems.”
Insider reported the following Republican lawmakers were among those in the “danger” zone of financial compliance: Rep. Pat Fallon of Texas; Rep. Dan Meuser of Pennsylvania; Rep. Blake Moore of Utah; Rep. Lance Gooden of Texas; Rep. Diana Harshbarger of Tennessee; Rep. Kevin Hern of Oklahoma; Sen. Tommy Tuberville of Alabama; and Rep. Chris Jacobs of New York.
The list continued with several Democrats who had violated the STOCK Act as well: Sen. Dianne Feinstein of California; Rep. Susie Lee of Nevada; Rep. Tom Malinowski of New Jersey; Rep. Sean Patrick Maloney of New York; Rep. Kim Schrier of Washington; and Rep. Tom Suozzi of New York.
So what is the STOCK Act? An acronym for “Stop Trading on Congressional Knowledge Act,” the 2012 provision made it illegal for Congress members to participate in insider trading, Investopedia reported.
To many, it was surprising that this had to be formalized in law since many just assumed insider trading was illegal. But until 2012, “trading based on material nonpublic information — otherwise known as insider trading — was both legal and commonplace among members of Congress,” Investopedia explained.
Nine years ago, the STOCK Act made it expressly illegal. The act was widely supported in Congress, by both Republicans and Democrats. In the House, it passed 417-2 and in the Senate, it passed with a 96-3 vote.
Now at least 14 Congress members have failed to properly disclose financial trades.
“These lawmakers have violated the Stop Trading on Congressional Knowledge Act of 2012 by failing to properly disclose financial trades, many to a significant degree,” Insider reported.
“Some also employ senior staff members who’ve violated the STOCK Act or haven’t themselves taken proactive steps to avoid potential conflicts of interest,” the outlet found.
Should insider trading be legal for congressional representatives?
Perhaps the most prominent member of Congress listed among the 14 is Feinstein.
The senator violated the STOCK Act one time, which totaled about $15,000. She said that she paid the fine for not disclosing her trade, but did not provide any proof.
Schrier violated the act once, totaling at least $500,000. Schrier did not comment or confirm whether the fines had been paid.
Other members of Congress reportedly violated the STOCK Act over 100 times.
Fallon had 118 late disclosures, which totaled about $9,113,000.
“Upon learning of his STOCK Act violation, Congressman Fallon self-reported himself to the Ethics Committee and proactively paid his fines. The congressman has not been late on reporting stock transactions since his discovery of his first infringements,” Austin Higginbotham, Fallon’s communications director, said in a statement.
Suozzi violated the STOCK Act about 300 times, which resulted in at least $3,200,000. Suozzi did not comment on whether he had paid the fines necessary for these violations.
The infringements regarding the STOCK Act are nothing new, though.
In September, an outside ethics group complained that seven House lawmakers didn’t disclose stock trades, NPR reported.
“The lack of accountability we’ve seen in regard to STOCK Act compliance is basically giving elected officials the green light to buy and sell stocks based on information gained from committee meetings without any transparency for their voters,” Kedric Payne, general counsel and senior director of ethics at the Campaign Legal Center, wrote in a statement.
In July, Forbes also put the spotlight on three Republican lawmakers who did not report “up to $22 million in stock trades made earlier this year” — Tuberville, Moore and Fallon.
“Insider and several other news organizations have this year identified 47 members of Congress who’ve failed to properly report their financial trades as mandated by the Stop Trading on Congressional Knowledge Act of 2012, also known as the STOCK Act,” the outlet reported.
In light of all these violations, many ethics groups and government watchdogs are pushing for fines and punishments for STOCK Act violations to be harsher.
“While lawmakers who violate the STOCK Act face a fine, the penalty is usually small — $200 is the standard amount — or waived by House or Senate ethics officials,” Insider reported.
“Ethics watchdogs and even some members of Congress have called for stricter penalties or even a ban on federal lawmakers from trading individual stocks, although neither has come to pass.”
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