Thursday night, the Senate passed its legislation to ban lawmakers from trading stocks based on information they received in the halls of Congress. The Stop Trading on Congressional Knowledge Act of more commonly called the "Stock Act" was passed in an overwhelming vote of 96-3. But does this law really have teeth or is it window dressing in an effort to build back up the low approval ratings of Congress? Jacob Frenkel, former SEC attorney and partner at Shulman Rogers, weighed in.

LL: Do you think the Congress’ bill really takes a bite out of the insider trading concerns?

JF: No, because the laws already in place adequately address members and their staffs engaging in insider trading. This law essentially says ‘it applies to you, too,” which should be obvious. That supports the view that this window dressing.

There are two parts of that bill that are equally important but are being heavily overshadowed by the focus on expressly prohibiting insider trading. The first is the reporting the trades (purchase or sale) within 30 days.

That means it already took place one month ago. If the goal is really to prevent the misuse of information because of privileged access, then non-use of material nonpublic information still is on the honor system. The more effective mechanism would require pre-approval or pre-clearance of each trade. Many corporations require that, and more importantly the SEC requires it for any SEC staff member who buys or sells a security.

LL: And these issues are not esoteric.

JF: These are very practical issues. Because the way the bill was drafted, disclosing after you make the trade also gives someone who traded time and an opportunity to build a record around it.

Pre-approval would require advance disclosure to an ethics official, and provide valuable protection to the member or staff knowing that there was proper advance disclosure and receipt of trading approval.

If they really want to fix the objective, then they should consider a pre-approval or pre-clearance mechanism, which would be very easy to implement.

LL: What’s the other provision?

JF: The other provision is within 12 months, the GAO report on “political intelligence” will be out. The findings here will be interesting because we’ll see if the political intelligence networkers are accessing members or staffers, or mining the halls of Congress, for information that could assist in trading decisions by trading professionals. This is reminiscent of the issues surrounding expert networks. We will find out then if this problem is greater than thought and how prevalent a problem exists.

LL: So in the end is this just window dressing?

JF: While the "Stock Act" provides clarity and sets forth a duty, with an affirmative filing obligation.  While not complete window dressing, you can drive a truck through the openings for potential abuse.

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A Senior Talent Producer at CNBC, and author of "Thriving in the New Economy:Lessons from Today's Top Business Minds."