House bans federal lawmakers from insider trading
Friday, February 10, 2012
WASHINGTON (AP) — The House on Thursday joined the Senate in voting to explicitly prohibit members of Congress and other top officials from making investments on insider information. But an effort to bridle purveyors of Capitol Hill political intelligence could delay the bill’s enactment.
House Republicans stripped out provisions from the Senate bill that would:
—Treat people who sell inside information about Congress like lobbyists and make them file reports detailing what they spend and with whom they talk.
— Restore the tools to prosecutors to bring public corruption cases against state and federal officials.
The Senate is unlikely to accept those changes, according to a Democratic leadership aide speaking on condition of anonymity because no final decision has been made. That would mean negotiators would have to find a compromise agreeable to both houses before the bill could be signed into law. President Barack Obama has already said he would sign it.
The bill passed the House by a 417-2 vote just a week after the Senate approved its version 96-3. The lopsided votes illustrate how members of both houses are united in trying to dig Congress out from dismal approval ratings.
As much as anything, the bill is a response to a CBS “60 Minutes” segment in November raising questions about lawmakers enriching themselves through investments based on nonpublic information they gleaned in their jobs. Lawmakers and other public officials already are covered by laws prohibiting insider trading.
Majority Leader Eric Cantor, R-Va., said the overwhelming vote “puts some pressure on the Senate” to accept the House bill. He said the Senate-added provisions stray from the bill’s main purpose of winning back the public’s trust — and are “outside of what we do and who we are.”
Senior executive branch officials already have tougher ethics rules than members of Congress. Lawmakers said they decided to include them in the bill’s coverage to create a level ethical playing field for all federal policymakers. About 28,000 executive branch officials file public, annual financial disclosure forms — the same as members of Congress and their top aides.
Under the House bill, lawmakers, their aides and the other top policymakers would have to disclose to the public new financial transactions within 30 or 45 days from when they occurred, depending on the circumstances. The Senate bill requires disclosure within 30 days. Cantor’s office said the language was broad enough to cover real estate deals and other investments beyond buying and selling stock.
The bill also would prevent members of Congress from getting special access to initial public offerings of stock, or IPOs. That provision was aimed at House Democratic Leader Nancy Pelosi, D-Calif., whose husband in 2008 purchased shares in a Visa IPO while a credit card reform bill was before the House. Pelosi denied any connection between the investment and the credit card bill.
Lawmakers also would have to start disclosing all their mortgages, ending an exemption for loans on personal residences. And the House legislation vastly expands the list of felony convictions that would require lawmakers to be ineligible for their government pensions.
Sen. Charles Grassley, R-Iowa, sponsored the Senate provision that would make people who collect information from lawmakers and their aides — and sell it to investors — subject to the same registration and reporting requirements as lobbyists.
Cantor deleted it, inserting in its place language calling for a study of so-called political intelligence firms. “Think of the wording, political intelligence. There’s so much question about what that even means,” he said, explaining that the requirement might make it harder for constituents to ask lawmakers about the status of bills.
The public corruption language that was in the Senate bill was an attempt by to restore prosecution tools taken away by the Supreme Court. It was sponsored by Sens. Patrick Leahy, D-Vt., and John Cornyn, R-Texas.
In 2010, the Supreme Court narrowed prosecutors’ use of an anti-fraud law, the so-called honest services statute, that had become an increasingly important tool in public corruption cases.
The court said prosecutors must present proof that defendants accepted bribes or kickbacks to win convictions in honest services cases. The 28-word fraud law makes it a crime “to deprive another of the intangible right of honest services.”
Cantor said the Leahy-Cornyn provision raises “broad constitutional questions, as the courts have pointed out on similar provisions.”
Rep. Louise Slaughter, D-N.Y., who has been trying for six years to get an insider trading bill passed, had a different interpretation of the removal of the registration and disclosure requirements for those who sell useful investment information learned from Congress.
“The Republican leadership couldn’t stomach the pressure,” she said, explaining that segments of the investment industry lobbied Republicans hard to get the language removed.
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