Senate Passes Insider-Trading Ban

I know that the Senate passing an insider trading ban is old news by now but I wanted to follow up on this topic that we initially started highlighting in the early days of our postings.  This topic resurfaced again when 60 Minutes starting airing various pieces such as Jack Abramoff: The Lobbyists Playbook and this piece via CNBC Boy Can These People Trade.  


Below is a recap of the Senate passing the ban via the WSJ

• After years of delay, Congress took a big step toward approving new rules to ban lawmakers from trading stocks based on information they pick up in the halls of Capitol Hill—a move aimed in part at helping repair the institution's low approval ratings.
• The Senate voted overwhelmingly, 96-3, to pass the legislation, called the Stop Trading On Congressional Knowledge Act, or Stock Act.
• Senate approval marks a remarkable turnaround for the bill, which was unpopular with lawmakers until very recently. First introduced by two little-known House members six years ago, the Stock Act had just nine co-sponsors just a few months ago. There was no similar legislation in the Senate.
• The bill gained steam after a series of media reports about lawmakers' stock trading, including several stories in The Wall Street Journal. Sen. Charles Grassley (R., Iowa), who voted for the bill, cited the Journal's stories on the Senate floor Thursday.
• The Senate vote came as lawmakers seek to repair their standing with the public amid record low approval ratings for Congress.  "We are very close to doing something so basic, so common sense, to begin to restore the public's trust and faith in our institution," Sen. Kirsten Gillibrand (D., N.Y.), an author of the legislation, said before the vote.
• Robert Khuzami, head enforcement official at the Securities and Exchange Commission, said in testimony late last year that it is possible that insider-trading laws do, in fact, apply to members of Congress.
• But he said it is possible that a federal judge could disagree with him and strike down an insider-trading case. As a result, he said it would be easier to prosecute an insider-trading case against a lawmaker if Congress approved legislation to make it clear that lawmakers have a duty to keep private the nonpublic information they hear in Congress about legislation and policy changes that could affect markets.
• The political intelligence industry comprises hundreds of lobbyists, former congressional aides and others who scour Washington for market-moving tips about pending government activities that could affect stock prices. These political intelligence purveyors are paid by hedge funds and other Wall Street firms to gather information about pending changes in public policy the investors can use to make trades.
• Before approving the bill, the Senate added provisions that would require members of Congress to make public the full value of their home mortgages; prohibit senior executives at government mortgage giants Freddie Mac and Fannie Mae from receiving bonuses while the companies remain under federal control; and ban former members of Congress from receiving government pensions if they are convicted of a felony.