It was a rare show of bipartisanship — President Barack Obama, flanked by Democrats and Republicans in April, signing into law a bill that would ban insider trading on Capitol Hill. The measure, known as the STOCK Act, had passed the House and Senate at warp speed.
“The powerful shouldn’t get to create one set of rules for themselves and another set of rules for everybody else,” the president said at the time.
Lawmakers proclaimed that the bill, officially called the Stop Trading on Congressional Knowledge Act, would restore trust in government. It also applied new rules to some employees of the executive branch.
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But CNN uncovered that the law that members of Congress thought they voted for earlier this year isn’t exactly as advertised. A loophole could still allow family members of some lawmakers to profit from inside information.
The STOCK Act requires that any trades of $1,000 or more made on or after July 3 have to be reported to the House and Senate within 45 days. But the House and Senate have two completely different interpretations of that rule.
In the Senate, the Ethics Committee released one page of guidelines last month ruling that members and their spouses and dependent children all have to file reports after they make stock or securities trades. But the House Ethics Committee disagreed.
Its 14-page memo notifies House members and aides covered by the law that their spouses and children aren’t covered. The Office of Government Ethics, which oversees all federal executive branch employees, sided with the House, informing its employees that their spouses and children don’t need to file these periodic reports.
Both of the lead sponsors of the Senate bill didn’t realize the discrepancy until CNN brought it to their attention.
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Massachusetts Republican Scott Brown, the only Republican senator to attend the White House signing ceremony, said he was “obviously very concerned.”
“Say I find out some information, I tell my wife and she goes and trades on it, what’s the difference?” Brown told CNN.
Brown, who speaks constantly about this bill in his neck-and-neck race for re-election against consumer advocate Elizabeth Warren, said the whole point of passing the law was to demonstrate that members of Congress weren’t held to a different standard.
“I mean, bottom line, we’re supposed to have that level of transparency and have us be treated like every other member of the United States and bottom line, if we can’t do it, then — sorry, if they can’t do it — then we shouldn’t be able to do it as well.”
Sen. Kirsten Gillibrand, D-New York, also criticized the House decision not to include congressional spouses and children.
“I think it’s wrong, and I think it’s unfortunate because the reality is the whole point of this legislation is we should play by the exact same rules as every other American citizen, and when all of America looks at Washington, they know it’s broken.”
“We’re trying to restore just a small measure of confidence through this kind of transparency and accountability,” Gillibrand said.
After CNN told Brown about the House interpretation, Brown fired off a letter to his GOP colleagues in the House, Speaker John Boehner and House Majority Leader Eric Cantor.
“The House interpretation leaves a loophole and the appearance of an ongoing double standard,” Brown said in the letter.
“It is deeply troubling that the House of Representatives and Executive Branch would attempt to operate under a substantially weaker interpretation than the Senate,” he added, demanding that the House adopt the Senate’s view and require all spouses and dependents to begin reporting stock trades.
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This story first ran on CNN on July 20, 2012.
