Letter: STOCK Act could create more problems than it solves

Opinion

Discussion

The Salem News has a real-name policy for commenting. Users may sign in using the Facebook Connect tool above the comments field. Once your first comment is posted by a moderator, all future comments will post automatically. If you prefer not to use Facebook, send an e-mail with your comments user name (which must be the same as your real name), city or town, street address and daytime phone number to comments@salemnews.com. A staff member will contact you directly to confirm your identity. It may take a day or two before you can post comments. Only your user name will be public. All users are required to follow our rules for commenting, which can be found here.

comments powered by Disqus

February 9, 2012

The Salem News Thu Feb 09, 2012, 04:30 AM EST

To the editor:

The Senate passed a bill late last week called the STOCK Act, which ostensibly deals with insider trading in Congress.

The vote was 96-3 — two Republicans and one Democrat voted no. As with Sarbanes-Oxley — which sailed through with three "no" votes in the House in 2002, yet is now criticized by everyone from GOP candidates to the Obama administration as being overly burdensome on legitimate smaller public companies — this vote tally could indicate that the "yes" votes simply followed the stampede and glossed over serious objections from the three dissenters.

What is not widely known, perhaps not even by some of the senators who voted for it, is that this bill is in significant part an anti-disclosure bill that would likely result in less transparency about Congress' doings.

The bill doesn't just bar employees of Congress from trading on non-public information; in many instances, it bans their disclosure of this information as well. The bill actually imposes a specific "duty" of "confidence," meaning confidentiality, with regard to information about Congress' actions that could affect the markets.

This is problematic, I write in OpenMarket.org, because "members and staffers have no practical way of assuring that those to whom they spread information won't use it for investment purposes. As a result, communication about important matters with outside groups may decrease markedly, and the very aim of transparency in government that was an impetus for this bill would be undermined." For example, a staffer who wanted to alert fiscal watchdog groups about a forthcoming earmark benefiting a Fortune 500 company, would do so knowing he or she could face liability if someone who received his or her email, trades in the stock. The bill could also effectively ban members and staffers from meetings and conference calls with ideological activists unless those meetings were open to the public.

News stories have raised legitimate concern about too much power and privilege in Congress and sensible reforms should be enacted.

And I favor some provisions in the STOCK Act subjecting members of Congress and their staffs to more rapid and specific disclosure of their investments.

But with regard to disclosure, there has been concern that the broad application of insider trading rules to communications in the private sector has inhibited disclosure about corporate wrongdoing. Congress should fix this, rather than compound the error with a whole new set of anti-disclosure rules that would muzzle much of the communication necessary for sunlight and reform.

John Berlau

Director

Center for Investors and Entrepreneurs

Competitive Enterprise Institute

Washington, D.C.

Text Only | Photo Reprints

Opinion

Search Results

Discussion

Letter: STOCK Act could create more problems than it solves

Site Map

Reader Access