Federal legislation to ban insider trading by members of Congress passed in the House of Representatives on Thursday morning, but some lawmakers complained the House version of the bill had been weakened.
The STOCK (Stop Trading on Congressional Knowledge) Act was co-sponsored by U.S. Rep. Jaime Herrera Beutler, R-Camas. Following the 417-2 vote on Thursday, Herrera Beutler said in a news release that she was proud to vote yes on the legislation.
“Just five months ago, folks were skeptical that the STOCK Act would ever see the light of day,” she said. “Hardworking taxpayers deserve to know that their federal representatives live under the same laws that they do, and that the public good will always come before personal gain.”
The STOCK Act passed the Senate last week. The Senate and House bills have some differences, and the two chambers will need to come to an agreement on the legislation.
Under the House version, members of Congress and congressional and executive staff members would be prohibited from buying
or selling securities, swaps or commodity futures based on nonpublic information they obtain through their jobs; prohibited from sharing nonpublic information about legislative actions for purposes of investing or profiting from investments; and be required to report within 45 days any investment transactions valued in excess of $1,000.
The bill also would prevent members of Congress who have been convicted of a crime from receiving taxpayer-funded pensions.
The Senate version of the bill would require so-called political intelligence firms to register the same as lobbyists, and they would have to file public reports on their spending and contacts with federal officials. Portions of the financial industry lobbied for removal of the proposal.
“The Republican leadership couldn’t stomach the pressure,” said Rep. Louise Slaughter, D-N.Y., who has been trying to get an insider trading bill passed for six years. She said the bill “let the political intelligence community off the hook.”
Majority Leader Eric Cantor, R-Va., who wrote the House bill, countered that a study of this growing but little-known industry made more sense. He said inclusion of the new rules at this point would have “raised far more questions than they would have answered.”
Democrats released a statement on Thursday afternoon criticizing Herrera Beutler for not fighting to preserve the language that Cantor stripped from the bill.
“Herrera Beutler let special interests win and failed to fight her Republican leaders when they watered down common-sense ethical reforms to ban insider trading and crack down on public corruption,” Jesse Ferguson of the Democratic Congressional Campaign Committee said.
But Herrera Beutler’s spokesman, Casey Bowman, said the first-term congresswoman would have liked the House version to include the original provisions, noting that she did co-sponsor the original bill with the stricter language. Bowman also said Herrera Beutler had no say in how the legislation was revised — only the choice to vote for or against the act.
Herrera Beutler’s predecessor, Democrat Brian Baird, co-sponsored a version of the legislation in 2006. The current version of the STOCK Act was introduced March 17 of last year by Rep. Timothy Walz, D-Minn., referred to a series of House committees, and reintroduced June 1.
The legislation was prompted in part by the insider trading scandal involving former House Majority Leader Tom DeLay and lobbyist Jack Abramoff in 1999 and 2000.
In researching the issue at the time, Baird learned that political intelligence firms marketing insider knowledge had operated in the nation’s capital since the 1970s but remained relatively unknown because they were not required to register their clients or report their earnings.
The measure drew only a handful of sponsors and had one sparsely attended hearing in 2006. But the movement to ban insider trading by Congress gained traction after Baird was featured on CBS TV’s “60 Minutes” last November. Herrera Beutler signed onto the legislation two days after the show aired.
The only representatives voting on Thursday against the act were John Campbell, R-Calif., and Rob Woodall, R-Ga.
The Associated Press contributed to this report.