A bill to bar members of Congress from trading stocks based on nonpublic political information has moved a step closer to becoming law.
US Capitol Building with cash
The STOCK Act, which stands for Stop Trading On Congressional Knowledge, was passed Thursday night by the Senate in a 96 to 3 vote. Its fate in the House, however, is uncertain.
House members, including Majority Leader Eric Cantor, R-Va., have criticized the bill for being too weak. Some of those concerns may have been addressed by amendments added to the legislation, including one that would apply the insider trading ban to the executive branch.
Under current law, it is not clear whether trading on information lawmakers learn in the course of their congressional work is banned.
Many legal scholars believe it is not. No member of Congress has ever been charged with trading on nonpublic congressional information.
Last year, a study of Congressional trading found that House members consistently outperform the market, suggesting that they are using their positions to gain an informational advantage. An earlier study found similar results by looking at trading by Senators.
Although a version of the STOCK Act has come up for consideration in past years, it has never been put up for a vote. This year, it has a better chance of passing, in part because of increased public awareness of the issue resulting from reporting by CNBC's Eamon Javers and CBS's 60 Minutes.
Both President Barack Obama and Cantor have said they are "pleased" with the vote, although Cantor said he is still reviewing the legislation.
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