Update: On April 15, 2013, the STOCK Act was amended with the signing into law of S. 716, receiving criticism for having removed some of the transparency provisions that previously characterized the bill. Now, only elected and nominated politicians (rather than their staffers as well) need to disclose their financial statements and forms.
On April 4, 2012, President Obama signed the Stop Trading on Congressional Knowledge Act, or STOCK Act (S.2038) for short. What should you know about the STOCK Act?
What will the STOCK Act do?
While the House of Representatives posts disclosure information online, the Senate requires one to physically appear in a Senate office building to obtain any information. The STOCK Act will make it mandatory for public reports of new transactions exceeding $1,000 be posted online either 30 days after the individual was notified of a transaction in his or her account, or 45 days after the transaction.
The goal of posting such information online in an easily searchable, public database is to deter government officials from profiting on insider knowledge. Being a member of the House or Senate obviously leads to opportunities, information, and connections inaccessible to the public.
Pros of the STOCK Act
- Knowledge: Members of the Senate are successful investors, supplementing their income through successful stocks. Now, curious investors can track Congress members’ investments, and perhaps learn a thing or two of profitable investing practices. After all, Senators are one of the best investors around — see below to check out some members’ financial information.
- Create an even playing field: The STOCK Act aims to level the privileges of a member of Congress to be equal with the public. There won’t be one set of special rules for the powerful, and another one for citizens. Fair play is the name of the game.
- Transparent government: Trust in the government is at a low, especially for Congress in particular. Requiring government officials to disclose personal financial information will allow people the opportunity to fully understand their representatives, and elect others with more knowledge.
Cons of the STOCK Act
- Privacy issues: Requiring all personal financial information to be made public sounds great when it is just shedding light on insider trading, but information released publicly also includes real estate, retirement funds and personal contact information. Identity theft is a reasonable concern, along with security. Such personal information concerning identity could fall into the wrong hands.
- Foreign interests: Government officials who travel regularly are fearful that disclosing their substantial financial records will attract those wishing to kidnap children and/or spouses to gain a large monetary reward.
- US intelligence/Internet terrorism: Some government intelligence officers need privacy to actually work and cannot be “outed,” so their financial disclosure reports cannot and will not be made public. However, these missing reports will only confirm who is working as US intelligence personnel, risking their safety.
- It doesn’t do enough: Some opponents of the STOCK Act aren’t necessarily the ones with anything to hide. There is genuine concern the STOCK Act does not do enough, and is only a show of bells and whistles to please and quiet the public.
Checking out Congress members’ personal finances is pretty startling. There are definitely some political investing stars out there. For example, one of NerdWallet’s local officials here in the Bay Area:
Nancy Pelosi, D-California, has 73 assets, totaling between $43,446,075 to $204,550,000, and made 46 transactions in 2010, totaling between $5,999,041 to $15,660,000. According to Roll Call, she is the 13th richest member of Congress.
Or how about John Boehner, R-Ohio, current Speaker of the House? His net worth and assets are worth from $2,099,107 to $6,085,000.
And they say they aren’t doing it for the money!
Stock Act image courtesy of Shutterstock.