State of the Union Speech Shows Few Opportunities for Congressional Action

Disclosure to short

The disclosure period is to short. Congress "should be required to file forms a few days after every trade, as executives must," as was stated in the original act. The reporting of securities transactions should reveal to the public, hidden information that is happening now, not some historical record of things gone past, at least as timely, as confidential corporate information.

Five days

An article in the Wall Street Journal suggested transactions over $5,000.00 be reported in five days. Brian Baird who originated the Stock act said, “Really it should be 48 hours.” We are not trying to get something on congress people; we are trying to make public the secret information used by congress for their own personal trades, soon after they make the trades.

Real time

The way congress gets away with everything, is reporting it to late for anyone to do anything about it. Disclosure should be in real time, or the same two days like everybody else that falls under the insider trading laws, to substitute a philosophy of full disclosure for the current one of caveat emptor. We can't know what is in someone’s head or what they knew when they did something. But if it is promptly reported constituents can decide for themselves, and their vote will be unappealable.

Appearance

Congress made laws making insider-trading illegal for the private sector and exempted itself by avoiding prompt reporting requirements. The insider-trading loophole, that they give themselves is that they use time to hinder procession and cover things up. The SEC cannot have adequate enforcement without prompt disclosure. People calling for longer disclosure times appear to need more time to cover corrupt activities, and to destroy evidence.

Public interest

A policy requiring more timely and complete reporting of congressional security transactions is in the public interest. Reporting requirements similar to those imposed on corporate insiders should be used for helping voters evaluate the behavior of their Representatives in terms of the pursuit of personal profit versus obligations to the public interest.

Enforcement

Members of Congress and legislative staffers are immune from enforcement of insider-trading laws, and are taking advantage of their positions to the public’s detriment. The SEC is helpless to prevent it because Congress refuses prompt disclosure of there trading activities and they can hide evidence behind the Speech or Debate Clause. The current laws under section 10(b) of the Securities Exchange Act of 1934 (Exchange Act), and under federal statutes prohibiting mail fraud or wire fraud, already apply to members of Congress. And could be used if the SEC could get current information.

Double standard

Robert Khuzami, director of the enforcement division at the Securities and Exchange Commission, pointed out that congressional investments in ETFs, options and mutual funds based on inside information aren’t covered under the House bill.

Sumflow of HI 1:12PM January 25, 2012