Research Handbooks in Corporate Law and Governance series
Edited by Stephen M. Bainbridge
Chapter 9: Applying insider trading law to congressmen, government officials, and the political intelligence industry
This chapter considers the Stop Trading on Congressional Knowledge Act, or STOCK Act, passed by Congress by overwhelming margins in 2012 and signed by the President. The STOCK Act’s goal was to apply insider trading prohibitions contained in the Securities Exchange Act to members of Congress, their staffs, and the executive and judicial branches. The STOCK Act and congressional insider trading accusations were a hot topic in 2011 and 2012 after an exposé on 60 Minutes and a commercial by a Presidential candidate accused members of Congress of engaging in insider trading. In addition to questions about the propriety of excluding members of Congress and government officials from the insider trading laws, the hearings and initial drafts of the law sought also to prohibit trading by outsiders who receive information from members of Congress. This would apply in part to what has come to be known as the political intelligence industry, though application of earlier versions of the law would have also encompassed investment analysts far removed from Washington.
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