On Wednesday, Chairwoman of the Securities and Exchange Commission Mary Schapiro said she welcomed the STOCK (Stop Trading On Congressional Knowledge) Act banning members of Congress from using nonpublic information to make their investments but was unsure the SEC could enforce the ban once signed into law.
One of the biggest challenges the SEC faces in bringing an insider-trading case against lawmakers involves showing how they breached a duty of trust and confidence.
Schapiro said the bill is helpful because for the first time it provides “clarity that there is in fact a duty that members of Congress owe” to the government.
“This is very useful because we need to show a violation of a duty when we bring an insider-trading case,” she said.
But she noted that lawmakers still enjoy constitutional protections that could make it difficult for enforcement officials to bring a case.
She pointed to the “speech or debate clause” of the U.S. Constitution that gives members of Congress protection against prosecutions that threaten the legislative process.
Ms. Schapiro said that these Constitutional conflicts might potentially hamstring SEC insider trading investigations.
That is the constitution. You can’t ask Congress to fix that with legislation.
For these reasons and more, Breitbart editor Peter Schweizer and author of Throw Them All Out has advocated passage of Rep. Sean Duffy (R-WI)’s (R-WI) RESTRICT (Restoring Ethical Standards, Transparency, and Responsibility in Congressional Trading) Act. Duffy’s bill would force lawmakers to place all their assets in a blind trust or submit to a three day disclosure requirement on all investments. This, says Schweizer, is preferable to the STOCK Act, would create greater transparency, and would remove the challenges inherent to having the SEC, in charge of policing a Congress with budgetary power of them.
The STOCK Act has cleared both the House and Senate. Differences between the two bills are currently being hammered out before the bill will go to President Barack Obama who has said he will sign it.