II Calendar No. 301 112TH CONGRESS 2D SESSION S. 2038 To prohibit Members of Congress and employees of Congress from using nonpublic information derived from their official positions for personal benefit, and for other purposes. IN THE SENATE OF THE UNITED STATES JANUARY 26, 2012 Mr. LIEBERMAN, from the Committee on Homeland Security and Governmental Affairs, reported the following original bill; which was read twice and placed on the calendar A BILL To prohibit Members of Congress and employees of Congress from using nonpublic information derived from their official positions for personal benefit, and for other purposes. 1 Be it enacted by the Senate and House of Representa- 2 tives of the United States of America in Congress assembled, 3 SECTION 1. SHORT TITLE. mstockstill on DSK4VPTVN1PROD with BILLS 4 This Act may be cited as the ‘‘Stop Trading on Con- 5 gressional Knowledge Act of 2012’’ or the ‘‘STOCK Act’’. VerDate Mar 15 2010 21:53 Jan 26, 2012 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S2038.PCS S2038 2 1 SEC. 2. USE OF NONPUBLIC INFORMATION FOR PERSONAL 2 BENEFIT PROHIBITED. 3 The Congressional Accountability Act of 1995 (Pub- 4 lic Law 104–1; 2 U.S.C. 1301 et seq.) is amended by at 5 the end the following: 8 ‘‘TITLE VI—USE OF NONPUBLIC INFORMATION FOR PERSONAL BENEFIT PROHIBITED 9 ‘‘SEC. 601. DEFINITION. 6 7 10 ‘‘In this title— 11 ‘‘(1) the term ‘Member of Congress’ means a 12 member of the Senate or the House of Representa- 13 tives, a Delegate to the House of Representatives, 14 and the Resident Commissioner from Puerto Rico; 15 and 16 ‘‘(2) the term ‘employee of Congress’ means— 17 ‘‘(A) an employee of the Senate; and 18 ‘‘(B) an employee of the House of Rep- 19 20 resentatives. ‘‘SEC. 602. GENERAL PROHIBITION. 21 ‘‘No Member of Congress and no employee of Con- 22 gress shall use any nonpublic information derived from the mstockstill on DSK4VPTVN1PROD with BILLS 23 individual’s position as a Member of Congress or employee 24 of Congress, or gained from performance of the individ25 ual’s duties, for personal benefit. •S 2038 PCS VerDate Mar 15 2010 21:53 Jan 26, 2012 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S2038.PCS S2038 3 1 ‘‘SEC. 603. IMPLEMENTING RULES. 2 ‘‘The Select Committee on Ethics of the Senate and 3 the Committee on Standards of Official Conduct of the 4 House of Representatives shall issue rules or regulations 5 to carry out the purposes of section 602. 6 ‘‘SEC. 604. APPLICABILITY TO SECURITIES LAWS. 7 ‘‘(a) IN GENERAL.— 8 ‘‘(1) NOT EXEMPT.—Members of Congress and 9 employees of Congress are not exempt from the pro- 10 hibitions arising under section 10(b) of the Securi- 11 ties Exchange Act of 1934 and Rule 10b–5 there- 12 under, including the insider trading prohibitions. 13 ‘‘(2) DUTY.—For purposes of the insider trad- 14 ing prohibitions arising under section 10(b) of the 15 Securities Exchange Act of 1934 and Rule 10b-5 16 issued thereunder (or any successor to such Rule), 17 section 602 affirms a duty arising from a relation- 18 ship of trust and confidence owed by each Member 19 of Congress and each employee of Congress to Con- 20 gress, the United States Government, and the citi- 21 zens of the United States. 22 ‘‘(b) RULEMAKING AUTHORITY.—The Securities and mstockstill on DSK4VPTVN1PROD with BILLS 23 Exchange Commission may issue such rules or regulations 24 as the Commission determines are necessary or appro25 priate to implement subsection (a) or to otherwise ensure 26 that Members of Congress and employees of Congress are •S 2038 PCS VerDate Mar 15 2010 21:53 Jan 26, 2012 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S2038.PCS S2038 4 1 subject to the insider trading prohibitions that apply gen2 erally. 3 ‘‘SEC. 605. APPROPRIATE PUNITIVE, DISCIPLINARY, AND 4 OTHER REMEDIAL ACTION. 5 ‘‘A Member of Congress or an employee of Congress 6 who violates the prohibition under section 602 shall be 7 subject to appropriate punitive, disciplinary, and other re8 medial action in accordance with any applicable laws, reso9 lutions, rules, or regulations. 10 ‘‘SEC. 606. RULE OF CONSTRUCTION. 11 ‘‘Nothing in this title shall be construed to be in dero- 12 gation of existing obligations, duties and functions of a 13 Member of Congress or an employee of Congress or to 14 limit or otherwise alter the securities laws, the authority 15 of the Securities and Exchange Commission under such 16 laws, or other laws of the United States.’’. 17 SEC. 3. TECHNICAL, CONFORMING, AND CLERICAL AMEND- 18 MENTS. 19 The Congressional Accountability Act of 1995 is 20 amended— 21 (1) in section 1(b) by inserting, after the item 22 relating to section 509, the following: mstockstill on DSK4VPTVN1PROD with BILLS ‘‘TITLE VI—USE OF NONPUBLIC INFORMATION FOR PERSONAL BENEFIT PROHIBITED ‘‘Sec. ‘‘Sec. ‘‘Sec. ‘‘Sec. 601. 602. 603. 604. Definition. General prohibition. Implementing rules. Applicability to securities laws. •S 2038 PCS VerDate Mar 15 2010 21:53 Jan 26, 2012 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6211 E:\BILLS\S2038.PCS S2038 5 ‘‘Sec. 605. Appropriate punitive, disciplinary, and other remedial action. ‘‘Sec. 606. Rule of construction.’’; 1 and 2 (2) in section 413 (2 U.S.C. 1413) by striking 3 ‘‘408’’ and inserting ‘‘408, or to bring a judicial pro- 4 ceeding to enforce the prohibition under section 5 602,’’. 6 SEC. 4. CONFORMING CHANGES TO THE COMMODITY EX- 7 8 CHANGE ACT. Section 4c(a) of the Commodity Exchange Act (7 9 U.S.C. 6c(a)) is amended by— 10 (1) inserting ‘‘or any Member of Congress or 11 congressional employee’’ after ‘‘Federal Govern- 12 ment,’’— 13 (A) the first time it appears in paragraph 14 (3); 15 (B) the first time it appears in paragraph 16 (4)(A); 17 (C) in paragraph (4)(B); and 18 (D) in paragraph clause (4)(C)(iii); 19 (2) inserting ‘‘or by Congress’’— 20 (A) in paragraph (3), before ‘‘in a man- 21 ner’’; mstockstill on DSK4VPTVN1PROD with BILLS 22 (B) in paragraph (4)(A), before ‘‘in a man- 23 ner’’; and 24 (C) in paragraph (4)(C)— •S 2038 PCS VerDate Mar 15 2010 21:53 Jan 26, 2012 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S2038.PCS S2038 6 1 (i) before ‘‘that may affect’’ and 2 (ii) before ‘‘in a manner’’ ; 3 (3) in paragraphs (3) and (4)(A), inserting 4 ‘‘Member,’’ after ‘‘position of the’’; and 5 (4) in paragraph (4)(C)(iii), inserting ‘‘to Con- 6 7 gress’’ after ‘‘Federal Government’’. SEC. 5. PROMPT 8 REPORTING OF FINANCIAL TRANS- ACTIONS. 9 (a) REPORTING REQUIREMENT.—Section 101 of the 10 Ethics in Government Act is amended by adding at the 11 end the following subsection: 12 ‘‘(j) Within 30 days after any transaction required 13 to be reported under subparagraph 102(a)(5)(B) of this 14 Act, a Member of Congress or officer or employee of Con15 gress shall file a report of the transaction.’’. 16 (b) EFFECTIVE DATE.—The amendment made by 17 subsection (a) shall apply to transactions occurring on or 18 after the date that is 90 days after the date of enactment 19 of this Act. 20 SEC. 6. REPORT ON POLITICAL INTELLIGENCE ACTIVITIES. 21 (a) REPORT.— mstockstill on DSK4VPTVN1PROD with BILLS 22 (1) IN GENERAL.—Not later than 12 months 23 after the date of enactment of this Act, the Comp- 24 troller General of the United States, in consultation 25 with the Congressional Research Service, shall sub- •S 2038 PCS VerDate Mar 15 2010 21:53 Jan 26, 2012 Jkt 019200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S2038.PCS S2038 7 1 mit to the Committee on Homeland Security and 2 Governmental Affairs of the Senate and the Com- 3 mittee on Oversight and Government Reform of the 4 House of Representatives a report on the role of po- 5 litical intelligence in the financial markets. 6 7 (2) CONTENTS.—The report required by this section shall include a discussion of— 8 (A) what is known about the prevalence of 9 the sale of political intelligence and the extent 10 to which investors rely on such information; 11 (B) what is known about the effect that 12 the sale of political intelligence may have on the 13 financial markets; 14 (C) the extent to which information which 15 is being sold would be considered non-public in- 16 formation; 17 (D) the legal and ethical issues that may mstockstill on DSK4VPTVN1PROD with BILLS 18 be raised by the sale of political intelligence; 19 (E) any benefits from imposing disclosure 20 requirements on those who engage in political 21 intelligence activities; and 22 (F) any legal and practical issues that may 23 be raised by the imposition of disclosure re- 24 quirements on those who engage in political in- 25 telligence activities. •S 2038 PCS VerDate Mar 15 2010 21:53 Jan 26, 2012 Jkt 019200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S2038.PCS S2038 8 1 (b) DEFINITION.—For purposes of this section, the 2 term ‘‘political intelligence’’ shall mean information that 3 is— 4 (1) derived by a seller from direct communica- 5 tions with executive branch and legislative branch of- 6 ficials; and 7 (2) provided in exchange for financial com- 8 pensation to a client who intends, and who is known 9 by the seller to intend, to use the information to in- 10 form investment decisions. 11 SEC. 7. PUBLIC FILING AND DISCLOSURE OF FINANCIAL 12 DISCLOSURE FORMS OF MEMBERS OF CON- 13 GRESS AND CONGRESSIONAL STAFF. 14 (a) PUBLIC, ON-LINE DISCLOSURE 15 DISCLOSURE FORMS OF MEMBERS OF OF FINANCIAL CONGRESS AND 16 CONGRESSIONAL STAFF.— mstockstill on DSK4VPTVN1PROD with BILLS 17 (1) IN GENERAL.—Not later than August 31, 18 2012, or 90 days after the date of enactment of this 19 Act, whichever is later, the Secretary of the Senate 20 and the Sergeant at Arms of the Senate, and the 21 Clerk of the House of Representatives, shall ensure 22 that financial disclosure forms filed by Members of 23 Congress, officers of the House and Senate, can- 24 didates for Congress, and employees of the Senate 25 and the House of Representatives in calendar year •S 2038 PCS VerDate Mar 15 2010 21:53 Jan 26, 2012 Jkt 019200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S2038.PCS S2038 9 1 2012 and in subsequent years pursuant to title I of 2 the Ethics in Government Act of 1978 are made 3 available to the public on the respective official 4 websites of the Senate and the House of Representa- 5 tives not later than 30 days after such forms are 6 filed. 7 (2) EXTENSIONS.—The existing protocol allow- 8 ing for extension requests for financial disclosures 9 shall be retained. Notices of extension for financial 10 disclosure shall be made available electronically 11 under this subsection along with its related disclo- 12 sure. mstockstill on DSK4VPTVN1PROD with BILLS 13 (3) REPORTING TRANSACTIONS.—In the case of 14 a transaction disclosure required by section 101(j) of 15 the Ethics in Government Act of 1978, as added by 16 this Act, such disclosures shall be filed not later 17 than 30 days after the transaction. Notices of exten- 18 sion for transaction disclosure shall be made avail- 19 able electronically under this subsection along with 20 its related disclosure. 21 (4) EXPIRATION.—The requirements of this 22 subsection shall expire upon implementation of the 23 public disclosure system established under subsection 24 (b). •S 2038 PCS VerDate Mar 15 2010 21:53 Jan 26, 2012 Jkt 019200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S2038.PCS S2038 10 1 (b) ELECTRONIC FILING 2 AVAILABILITY 3 MEMBERS OF OF AND ON-LINE PUBLIC FINANCIAL DISCLOSURE FORMS CONGRESS, OFFICERS OF THE HOUSE OF AND 4 SENATE, AND CONGRESSIONAL STAFF.— 5 GENERAL.—Subject to paragraph (6) 6 and not later than 18 months after the date of en- 7 actment of this Act, the Secretary of the Senate and 8 the Sergeant at Arms of the Senate and the Clerk 9 of the House of Representatives shall develop sys- 10 mstockstill on DSK4VPTVN1PROD with BILLS (1) IN tems to enable— 11 (A) electronic filing of reports received by 12 them pursuant to section 103(h)(1)(A) of title 13 1 of the Ethics in Government Act of 1978; and 14 (B) public access to financial disclosure re- 15 ports filed by Members of Congress, Officers of 16 the House and Senate, candidates for Congress, 17 and employees of the Senate and House of Rep- 18 resentatives, as well as reports of a transaction 19 disclosure required by section 101(j) of the Eth- 20 ics in Government Act of 1978, as added by 21 this Act, notices of extensions, amendments and 22 blind trusts, pursuant to title I of the Ethics in 23 Government Act of 1978 through databases 24 that— •S 2038 PCS VerDate Mar 15 2010 21:53 Jan 26, 2012 Jkt 019200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S2038.PCS S2038 11 1 (i) are maintained on the official 2 websites of the House of Representatives 3 and the Senate; and 4 (ii) allow the public to search, sort 5 and download data contained in the re- 6 ports. 7 (2) LOGIN.—No login shall be required to 8 search or sort the data contained in the reports 9 made available by this subsection. A login protocol 10 with name of user shall be utilized by a person 11 downloading data contained in the reports. For pur- 12 poses of filings under this section, section 105(b)(2) 13 of the Ethics in Government Act of 1978 does not 14 apply. 15 (3) PUBLIC tion 105(b)(1) of title 1 of the Ethics in Government 17 Act of 1978, electronic availability on the official 18 websites of the Senate and the House of Representa- 19 tives under this subsection shall be deemed to have 20 met the public availability requirement. (4) FILERS COVERED.—Individuals required 22 under the Ethics in Government Act of 1978 or the 23 Senate Rules to file financial disclosure reports with 24 the Secretary of the Senate or the Clerk of the 25 House shall file reports electronically using the sys- •S 2038 PCS VerDate Mar 15 2010 to sec- 16 21 mstockstill on DSK4VPTVN1PROD with BILLS AVAILABILITY.—Pursuant 21:53 Jan 26, 2012 Jkt 019200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S2038.PCS S2038 12 1 tems developed by the Secretary of the Senate and 2 the Clerk of the House. 3 (5) EXTENSIONS.—The existing protocol allow- 4 ing for extension requests for financial disclosures 5 shall be retained for purposes of this subsection. No- 6 tices of extension for financial disclosure shall be 7 made available electronically under this subsection 8 along with its related disclosure. 9 (6) ADDITIONAL TIME.—The requirements of 10 this subsection may be implemented after the date 11 provided in paragraph (1) if the Secretary of the 12 Senate or the Clerk of the House identify in writing 13 to relevant congressional committees an additional 14 amount of time needed. 15 (c) RECORDKEEPING.—Section 105(d) of the Ethics 16 in Government Act of 1978 is amended to read as follows: 17 ‘‘(d)(1) Any report filed with or transmitted to an 18 agency or supervising ethics office or to the Clerk of the 19 House of Representatives or the Secretary of the Senate 20 pursuant to this title shall be retained by such agency or 21 office or by the Clerk or the Secretary of the Senate, as 22 the case may be. mstockstill on DSK4VPTVN1PROD with BILLS 23 ‘‘(2) Such report shall be made available to the pub- 24 lic— •S 2038 PCS VerDate Mar 15 2010 21:53 Jan 26, 2012 Jkt 019200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\S2038.PCS S2038 13 1 ‘‘(A) in the case of a Member of Congress until 2 a date that is 6 years from the date the individual 3 ceases to be a Member of Congress; and 4 ‘‘(B) in the case of all other reports filed pursu- 5 ant to this title, for a period of six years after re- 6 ceipt of the report. 7 ‘‘(3) After the relevant time period identified under 8 paragraph (2), the report shall be destroyed unless needed 9 in an ongoing investigation, except that in the case of an 10 individual who filed the report pursuant to section 101(b) 11 and was not subsequently confirmed by the Senate, or who 12 filed the report pursuant to section 101(c) and was not 13 subsequently elected, such reports shall be destroyed 1 14 year after the individual either is no longer under consid15 eration by the Senate or is no longer a candidate for nomi16 nation or election to the Office of President, Vice Presi17 dent, or as a Member of Congress, unless needed in an 18 ongoing investigation or inquiry.’’. 19 SEC. 8. FEDERAL EMPLOYEES. 20 (a) GENERAL PROHIBITION.—No Federal employee 21 shall use any nonpublic information derived from the indi22 vidual’s position as a Federal employee, or gained from mstockstill on DSK4VPTVN1PROD with BILLS 23 performance of the individual’s duties, for personal ben24 efit. •S 2038 PCS VerDate Mar 15 2010 21:53 Jan 26, 2012 Jkt 019200 PO 00000 Frm 00013 Fmt 6652 Sfmt 6201 E:\BILLS\S2038.PCS S2038 14 1 (b) IMPLEMENTING RULES.—Each office, officer, or 2 entity responsible for administering title I of the Ethics 3 in Government Act (5 U.S.C. App.) under section 111 of 4 that Act shall issue rules or regulations to carry out the 5 purposes of subsection (a) that shall be applicable to Fed6 eral employees subject to administration by the office, offi7 cer, or entity under that section 111. 8 (c) APPLICABILITY TO SECURITIES LAWS.— 9 (1) IN the purposes of the in- 10 sider trading prohibitions arising under section 11 10(b) of the Securities Exchange Act of 1934 and 12 Rule 10b–5 thereunder, the prohibition set forth in 13 subsection (a) states a duty of trust and confidence 14 of each Federal employee to the United States Gov- 15 ernment and the citizens of the United States. 16 mstockstill on DSK4VPTVN1PROD with BILLS GENERAL.—For (2) RULEMAKING AUTHORITY.—The Securities 17 and Exchange Commission may issue such rules or 18 regulations as the Commission determines are nec- 19 essary or appropriate to implement subsection (a) or 20 to otherwise ensure that Federal employees are sub- 21 ject to the insider trading prohibitions that apply 22 generally. 23 (d) APPROPRIATE PUNITIVE, DISCIPLINARY, AND 24 OTHER REMEDIAL ACTION.—A Federal employee who 25 violates the prohibition under subsection (a) shall be sub- •S 2038 PCS VerDate Mar 15 2010 21:53 Jan 26, 2012 Jkt 019200 PO 00000 Frm 00014 Fmt 6652 Sfmt 6201 E:\BILLS\S2038.PCS S2038 15 1 ject to appropriate punitive, disciplinary, and other reme2 dial action in accordance with any applicable laws, resolu3 tions, rules, or regulations. 4 (e) FEDERAL EMPLOYEE.—In this section, the term 5 ‘‘Federal employee’’— 6 (1) has the meaning given the term ‘‘employee’’ 7 under section 2105 of title 5, United States Code; 8 and 9 (2) includes— 10 (A) the President; 11 (B) the Vice President; 12 (C) a Member of Congress, as defined 13 under section 2106 of title 5, United States 14 Code; 15 (D) a judge or justice of the United 16 States; and 17 (E) an employee of the United States 18 Postal Service or the Postal Regulatory Com- 19 mission. 20 (f) RULE OF CONSTRUCTION.—Nothing in this sec- 21 tion shall be construed to be in derogation of existing laws, mstockstill on DSK4VPTVN1PROD with BILLS 22 regulations, or ethical obligations of Federal employees. •S 2038 PCS VerDate Mar 15 2010 21:53 Jan 26, 2012 Jkt 019200 PO 00000 Frm 00015 Fmt 6652 Sfmt 6201 E:\BILLS\S2038.PCS S2038 Calendar No. 301 S. 2038 mstockstill on DSK4VPTVN1PROD with BILLS 112TH CONGRESS 2D SESSION A BILL To prohibit Members of Congress and employees of Congress from using nonpublic information derived from their official positions for personal benefit, and for other purposes. JANUARY 26, 2012 Read twice and placed on the calendar S2038 E:\BILLS\S2038.PCS Sfmt 6651 Fmt 6651 Frm 00016 PO 00000 Jkt 019200 21:53 Jan 26, 2012 VerDate Mar 15 2010