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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 bill.

 

 
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