February 11, 2012
House Republicans Gut Key Provision of STOCK Act
by Robert Kropp
House Majority Leader Eric Cantor strips provision requiring political intelligence consultants to
register as lobbyists from version of bill passed by Senate.
In his State of the Union speech last month, President Obama said to members of Congress, "Send me
a bill that bans insider trading by members of Congress, and I will sign it tomorrow." Meanwhile,
the Washington Post reported this week that the Office of Congressional
Ethics has been investigating Rep. Spencer Bachus (R-Ala.), the chairman of the House Financial
Services Committee, for violations of insider-trading laws.
While the challenge
delivered by Obama seems well-timed, a bill prohibiting members of Congress "from using nonpublic
information derived from their official positions for personal benefit" has, in fact, been before
Congress since 2006, when Rep. Louise Slaughter (D-NY) first introduced the Stop Trading on
Congressional Knowledge (STOCK) Act. However, until insider trading by members of Congress was
reported by 60 Minutes in November, the bill received insufficient support.
One week after
Obama's State of the Union speech, the Senate, by a vote of 96-3, passed its version of the STOCK
Act. The Senate's version of the bill included an amendment which would require members of the
political intelligence industry to register as lobbyists.
As the Wall Street
Journal reported in December, political intelligence operatives organize meetings of lawmakers
with hedge funds and other investors. The practice has reportedly grown into an industry worth as
much as $400 annually.
Despite the Senate's overwhelming support for the amendment
targeting the political intelligence industry, House Majority Leader Eric Cantor (R-VA) stripped it
from the bill to be voted on by the House of Representatives. He did so without consulting with
Slaughter, the long-time sponsor of the STOCK Act.
According to MapLight, a nonprofit organization that studies the
influence of money on politics, Cantor, along with House Speaker John Boehner, are the two largest
recipients of contributions from securities & investment interest groups in the House.
Sen. Charles Grassley (R-IA), the sponsor of the amendment, said, "It's astonishing and
extremely disappointing that the House would fulfill Wall Street's wishes by killing this
provision. If Congress delays action, the political intelligence industry will stay in the shadows,
just the way Wall Street likes it."
The bill passed the House by a vote of 417-2. A
conference committee is expected to seek to resolve the differences between the two versions of the