Stop Trading on Congressional Knowledge Act

The Stop Trading on Congressional Knowledge (STOCK) Act of 2012 is an Act of Congress designed to combat insider trading. It was signed into law by President Barack Obama on April 4, 2012. The law prohibits the use of non-public information for private profit, including insider trading by members of Congress and other government employees. It confirms changes to the Commodity Exchange Act, specifies reporting intervals for financial transactions. Originally written and introduced by Washington Congressman Brian Baird, the STOCK Act gained popularity following a 60 Minutes segment on congressional insider trading in 2011, after which Republican Senator Scott Brown and Democratic Senator Kirsten Gillibrand reintroduced bills to combat the practice. In February 2012, the STOCK Act passed in the Senate by a 96–3 vote; the only no votes were senators Jeff Bingaman, Richard Burr, and Tom Coburn. Later the House of Representatives passed it by a 417–2 vote. The bill was supported heavily by vulnerable incumbents and signed into law by President Obama. According to the current United States Senate Select Committee on Ethics, "A member, officer, or employee of the Senate shall not receive any compensation, nor shall he permit any compensation to accrue to his beneficial interest from any source, the receipt or accrual of which would occur by virtue of influence improperly exerted from his position as a member, officer, or employee." Background The law is yet another addition to the series of policy created to mandate and regulate the transactions of securities. The Securities and Exchange Act of 1933 and was the first policy created to protect the sale of primary security transactions by companies. Also known as the "Truth in Securities" law, it paved the way to provide investors with more protection and a fair opportunity for their liquid assets. Congress saw the lack of information provided to investors was a large disadvantage to investors and derailed their interest, causing a lack of liquidity in the market during the recovery. It also laid out examples and identified situations of fraudulent activity that has been previously committed by companies.