Connecticut Sen. Joe Lieberman said Wednesday the Securities and Exchange Commission (SEC) will file a statement with a Senate committee, saying insider trading by members of Congress is illegal and the SEC believes it has the authority to punish those found engaging in the practice. The Senate Homeland Security and Governmental Affairs Committee is holding a hearing on a bill today to prohibit insider trading by members of Congress and their employees.
The bill — introduced by Massachusetts GOP Sen. Scott Brown — would bar members or employees of Congress and the executive branch from using nonpublic information obtained through their public service for the purpose of investing for personal financial gain.
Despite the SEC filing, Lieberman says he is “still concerned that the law is not clear when it comes to the possibility of insider trading by members of Congress or our staffs — and, therefore, in the interest of perception, prevention, and punishment, we ought to be adopting a law to specifically make insider trading by members of Congress illegal.”
The insider trading probe gained steam with the publication of a new book, “Throw Them All Out,” by conservative author Peter Schweizer, a research fellow at Stanford University’s Hoover Institution, who details alleged abuses by members of both the House and the Senate.
The book was heavily featured on “60 Minutes” with reporter Steve Kroft going after leaders of the two parties in the House on camera. Both Speaker John Boehner and former Speaker Nancy Pelosi denied they had done anything wrong.
Lieberman said the strong denials were an impetus for the legislation.
“I’ll tell you what my feeling is about this: That everyone has risen so strongly to defend themselves, that I think we are going to pass a bill to make insider trading by members of Congress or our staffs illegal,” Lieberman said. “And we’re going to set up some mechanisms to make it less likely.
“Here are a couple of things we could do: We could try to make the filings more detailed. Second, instead of having them filed once a year, we could have a requirement for transparency or disclosure of stock transactions within a shorter period of time after they happen,” he said. “All of it in an attempt to open up this trading by members of Congress in stocks and other investments to sunlight.
“And when you know that that is going to happen, you’re less likely to take a chance . . . on doing something wrong,” Lieberman continued. “I mean, this is a classic case where whether or not members of Congress have benefited personally — financially — from information they have here on the inside, in some sense, it is not that it doesn’t matter. It does matter. But the perception of the public probably is that this is happening.”
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