I hate the idea of more laws, but because our politicians have shown a failure of ethical leadership, we must reassert the rule of law through strong new legislation that holds Congress accountable and prevents retaliation against whistle-blowers and regulatory agencies investigating corruption. Legislation has been put forward, but there are serious concerns that these bills contain major loopholes in stopping congressional insider trading and the gifting of IPO stocks from companies seeking to influence policy. In fact, Robert Khuzami, the SEC’s director of enforcement, testified that the bills as written only make stock transactions related to pending or prospective legislation illegal, not any other insider information trading; and they only cover stock transactions, not options trades, exchange traded funds or mutual funds.
The bills by Sens. Scott Brown, R-Mass., and Kirsten Gillibrand, D-N.Y., are particularly weak. Members of Congress should disclose all trading activities immediately, not after 90 days as their bills propose. More immediate disclosure deadlines (similar to the strict deadlines corporate executives adhere to when trading certain amounts of stock) are imperative for real transparency.
Members of Congress must be required to put their assets into blind and “deaf” trusts. Deaf because we must make it illegal both to trade on non-public government information and to pass on such information. It does no good to set up a blind trust run by a friend, family member, or acquaintance and then casually pass on information to that person. Technically, members of Congress can claim they weren’t actually making the trade or ordering another person to make the trade; they were simply “having a conversation” concerning information any competent trader would know what to do with.