April 4 (Bloomberg) -- President Barack Obama signed into law a bill strengthening the ban on insider trading by members of Congress and other government officials who might profit on private knowledge they gain from work.
“We were sent here to serve the American people and look out for their interests, not to look out for our own interests,” Obama said at a signing ceremony in Washington, joined by Republican and Democratic members of Congress. “There is a deficit of trust between this city and the rest of the country.”
The president had called for passage of the bill in his State of the Union message in January. It is called the Stock Act, for Stock Trading on Congressional Knowledge.
The law prohibits lawmakers, their staffs and some executive branch employees from trading stocks, commodities or futures based on private information they learn on the job. It would prevent lawmakers from participating in initial public offerings that aren’t available to the general public.
Senator Joe Lieberman, a Connecticut independent who caucuses with Democrats and was one of the bill’s sponsors, has called the measure “the most significant congressional ethics reform in at least five years.”
Under terms of the new law, more than 28,000 senior government officials who already must file public disclosures, including the president, the vice president, cabinet members, lawmakers and their staffs, must publicly report all trades valued at $1,000 or more. The rule wouldn’t apply to widely held investment funds.
The House passed the measure Feb. 9 on a 417-2 vote, and the Senate followed March 22 on a 96-3 vote. The bill is S.2038.
Bills to tighten insider-trading rules on members of Congress had languished until late last year, when CBS’s “60 Minutes” program reported that lawmakers could legally trade stock based on non-public information, giving the legislation new urgency.
The report by Steve Kroft said that some members of Congress, including House Speaker John Boehner, an Ohio Republican, and Minority Leader Nancy Pelosi, a California Democrat, bought stock in companies while legislation that might affect those businesses was being debated. Both denied any wrongdoing.
The bill also was propelled by Congress’s low public opinion ratings. The Gallup poll reported March 21 that 82 percent of Americans disapprove of the job Congress is doing while 12 percent approve. The poll was conducted March 8-11.
The public approval rating is “essentially flat,” Gallup said, compared with the 10 percent approval rating in its February poll, a record low.