Econintersect: There was little new fanfare last week when President Obama signed into law legislation that will reduce some of the insider trading abuses by congress people, their staff and others in government. As reported in GEI News last June, efforts to get such legislation brought to a vote had languished for lack of support since at least 2006. When repeated publicity about abuses became more commonplace, reaching a high point with a “60 Minutes” episode last November. The president called for legislation in the State of the Union and finally congress members were falling all over themselves to support the long ignored initiative. The House passed the measure Feb. 9 by a 417-2 vote, and the Senate followed March 22 by a vote of 96-3.
Here is the 60 Minutes video that was the culmination of efforts to get attention paid to the problem:
Details from Bloomberg:
The law prohibits lawmakers, their staffs and some executive branch employees from trading stocks, commodities or futures based on private information they learn on the job. It would prevent lawmakers from participating in initial public offerings that aren’t available to the general public.
Under terms of the new law, more than 28,000 senior government officials who already must file public disclosures, including the president, the vice president, cabinet members, lawmakers and their staffs, must publicly report all trades valued at $1,000 or more within 30 days after they are informed of the transaction, and in no case any later than 45 days after the transaction occurred. The rule wouldn’t apply to widely held investment funds.
The law also prohibits bonuses for Fannie Mae (NYSE:FNMA) and Freddie Mac (NYSE:FMCC) as long as the companies remain under government conservatorship.
Editor’s note: Econintersect is amazed that this condition of corruption was tolerated for so long and that when it was ended there was so little notice in the media.
- Insider Traders in Government (GEI News, 24 June 2011)
- Law Strengthens Ban on Congressional Insider Trading (Financial Advisor, 5 April 2012)
- Stock Act Signed, JPMorgan Settlement, SEC Warns: Compliance (Carla Main, Bloomberg, 5 April 2012)