Yesterday, former Alaska Governor Sarah Palin outlined a four-part solution to end congressional insider trading and vowed not to “give up until we get the sudden and relentless reform we deserve.”
Citing the numerous deficiencies in the versions of the STOCK (Stop Trading On Congressional Knowledge) Act currently under consideration, Gov. Palin wrote in a USA Today op-ed that official Washington’s response to the congressional insider trading scandal has thus far been disappointing and “predictable.” As Palin notes:
First they denied it, then they dismissed the problem as much ado about nothing. Some said there was no need for new laws or action because the Securities and Exchange Commission could prosecute members of Congress under existing laws against insider trading.
For these reasons, Palin argues a comprehensive four-step reform measure is desperately needed.
First, writes Palin:
We must reassert the rule of law through strong new legislation that holds Congress accountable and prevents retaliation against whistle-blowers and regulatory agencies investigating corruption.
This provision is especially important given the Security and Exchange Commission’s (SEC) reticence to prosecute members of Congress for fear that they will slash the agency’s budget in retaliation. In 2006, the Justice Department suffered a similar threat from Congress when the FBI searched Rep. William Jefferson’s office after it received evidence that the former congressman was taking bribes. Absent whistle-blower protections, says Palin, the SEC could suffer a similar fate by investigating members of Congress for insider trading.
Second, Palin argues that members of Congress must submit to immediate disclosure of all trading activities.
The bills by Sens. Scott Brown, R-Mass., and Sen. Kirsten Gillibrand (D-NY), D-N.Y., are particularly weak. Members of Congress should disclose all trading activities immediately, not after 90 days as their bills propose. More immediate disclosure deadlines (similar to the strict deadlines corporate executives adhere to when trading certain amounts of stock) are imperative for real transparency.
A House bill introduced by Rep. Sean Duffy (R-WI) embodies the spirit of Palin’s disclosure rule. Specifically, the bill requires members of Congress to either set up a blind trust or submit to a three-day disclosure rule for investments. Palin says that while Rep. Duffy’s bill is a “step in the right direction,” she would nonetheless prefer to see members of Congress abide by “even stricter deadlines like the ones for corporate executives.”
The third reform Gov. Palin advocates would require that all members of Congress place their assets into blind and “deaf” trusts. Blind trusts alone, says Palin, still leave open the potential for elected officials to pass along potentially lucrative non-public government information to family members, friends, or acquaintances who can then trade on the insider information. As Palin points out:
Technically, members of Congress can claim they weren’t actually making the trade or ordering another person to make the trade; they were simply ‘having a conversation’ concerning information any competent trader would know what to do with.
Finally, Palin believes that any serious effort to stop congressional insider trading must also include conflict of interest provisions on earmarks designed to end the kind of sweetheart land and construction deals revealed in both the 60 Minutes investigation and Breitbart editor Peter Schweizer’s book, Throw Them All Out.
Palin believes her four-part solution represents a battle worth waging:
If there is one issue that unites Americans across the political spectrum, it’s absolute disgust with the corruption of our elected leaders. Congress and the White House need to earn the American people’s trust again. We the people are not going to give up until we get the sudden and relentless reform we deserve.
With Congress’s approval ratings at all-time lows, politicians looking to guard themselves from charges of insider trading or crony capitalism may still heed Gov. Sarah Palin’s clarion call. So far, however, no congressional insider trading bill proposed in Congress embodies all four of Palin’s key provisions.