NC congressional delegation split on insider trading bill

As Congress takes up legislation to ban insider-trading by its members and employees, local constituents will be paying special attention to their representatives’ votes on the bill, set to come up for a vote in the House of Representatives by next week.

The bill, known as the Stop Trading on Congressional Knowledge Act, is aimed at preventing congressmen and federal employees from privately benefitting from “nonpublic” knowledge disseminated through the legislative process, such as government contracts or merger considerations.

The Senate version of the bill, introduced on the floor Monday, passed on Thursday with a 96-3 vote.

This follows President Barack Obama’s mention of the subject during his State of the Union address, in which he specifically called upon the Congress to act.

“Send me a bill that bans insider trading by members of Congress,” he challenged last Tuesday, “and I will sign it tomorrow.”

Though the bill was first introduced in 2006 by Democrat Louise Slaughter of New York, it did not receive significant public attention until the airing of an investigative segment on CBS’ “60 Minutes” back in November.

The program called into question certain financial transactions of important political leaders in Congress, from Speaker John Boehner, R-Ohio, and former Speaker Nancy Pelosi, D-Calif., to Financial Services Committee Chairman Spencer Bachus, R-Ala., who is reported to have made a heavy profit from stock trades made before the economic crisis in 2008.

The bill’s impact on local races

North Carolina’s representatives remain mixed on the insider-trading bill, a factor which may have a significant impact on the congressional primaries and elections later this year. Rep. Sue Myrick, R-Charlotte, has co-sponsored the bill in the House while Democratic Sen. Kay Hagan voted to pass the legislation on Thursday.

Hagan’s Republican counterpart, Sen. Richard Burr, who was re-elected in 2010, was one of only three senators to vote down the bill. His opposition stems from the belief that current laws adequately address insider-trading, including congressional members.

“There are already laws in place to address this critical issue,” said Burr spokesman David Ward. “Members of Congress are elected to serve the people, not make money for themselves, and any member or staff member who breaks the already existing insider trading laws should be held responsible.”

Most of the attention this electoral campaign will likely be focused upon Rep. Patrick McHenry, R-Cherryville, who adamantly voiced his opposition to the bill for markedly different reasons.

Adopting the stricter line of House Majority Leader Eric Cantor, McHenry said he would not support the bill as it is written because it does not go far enough in eradicating the practice of “lawmakers improperly enriching themselves.”

“The STOCK Act does not address holes in the existing insider-trading law,” said McHenry, specifying that it does not address the “troubling practice of access to exclusive IPOs by high-ranking members.”

IPOs, or initial public offerings, can be among the most lucrative deals for any investor, let alone one with inside knowledge. McHenry called for members of Congress to publicly disclose all of their stock trades — a measure intended to demonstrate his commitment to transparency.

The campaign election to come

Political analysts concede that congressional insider-trading has become an issue for the highly unpopular Congress, now suffering with a 16 percent approval rating.

“This is an issue that has suddenly become hot,” admits Eric Heberling, associate professor of political science at UNC Charlotte.

“You can bet it’ll be a driving factor in the primaries and elections, especially with such an anti-incumbent, anti-government electorate this year,” he said. “If McHenry or anyone else votes against it, there is going to be a torrent of negative ads in the upcoming campaign. It’s going to be really tough to defend that vote in less than 30 seconds.”

Published on Gaston Gazette.

Yaël Ossowski is a Canadian-American journalist and writer living in Vienna. He is founder and editor of Devolution Review, deputy director at the Consumer Choice Center, and senior development officer for Students For Liberty. He was previously a national investigative reporter at Watchdog.org. He has a Master’s Degree in Philosophy, Politics, Economics (PPE) from the CEVRO Institute in Prague and a Bachelor's in Political Science from Concordia University, Montreal. Born in Québec and raised in the southern United States, he currently lives in Vienna, Austria, and his writings have appeared in newspapers, magazines, and online outlets across the world in multiple languages.
Website https://yael.ca
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