Washington (CNN) – The U.S. House on Friday eliminated a key requirement of the insider trading law for most federal employees, passing legislation exempting these workers, including congressional staff, from a rule scheduled to take effect next week that mandated online posting of financial transactions.
Aides to lawmakers insisted the changes were needed to avoid potential security risks to federal employees by revealing personal information.
The House vote followed similar action by the Senate Thursday. The votes were done with little notice and came at a time when most people were paying attention to the Senate’s work on high profile issues like guns and immigration.
One advocacy group pushing for greater government transparency blasted the move, saying it “guts" the law.
"Not only does the change undermine the intent of the original bill to ensure government insiders are not profiting from non-public information, it sets an extraordinarily dangerous precedent suggesting that any risks stem not from information being public but from public information being online,” Lisa Rosenberg of the Sunlight Foundation wrote in a statement,
This isn't the first time the new insider trading law, called the STOCK (Stop Trading on Congressional Knowledge) Act has been caught up in controversy.
In July 2012, CNN exposed a loophole in the law that could have allowed some family members of lawmakers to potentially profit from insider information. Because of CNN”s investigation both the House and the Senate passed legislation to clarify that the law applied to family members of all members of Congress.
The STOCK Act required that in addition to members of Congress, both executive branch employees and senior congressional aides also needed to report their stock trades regularly and post them online.
With this change those federal workers would still have to report any securities trades over the law's $1,000 threshold within 45 days. While these reports would be publicly available, they would no longer be posted online in a format that anyone can search or download.
The president, vice president, Cabinet secretaries, deputy secretaries, as well as members of Congress and candidates for Congress, would still need to post their financial transactions online.
Federal employees began expressing concerns about the national security risks of posting personal financial information online soon after government agencies moved to implement the STOCK Act last year.
Online posting was supposed to begin August 31, 2012, but Congress passed extensions three separate times pushing off the compliance date.
In December, the last time the House and Senate approved another extension signed by the president, they also directed the National Academy of Public Administration (NAPA), a non-profit group of public management experts chartered by Congress, to study whether there were real security risks associated with putting this kind of financial information on the Internet.
The report, delivered to the Hill in March 2013, said the insider trading law's disclosure rules could harm federal agencies’ missions and workers.
It recommended Congress "indefinitely suspend the online posting requirements and the unrestricted access to searchable, sortable, downloadable databases while continuing implementation of other requirements of the STOCK Act." Unless Congress acted, the law’s requirements would have gone into effect on Monday.
The report also went beyond the national security issue and cited potential privacy and safety issues arising from the online disclosure of personal financial information.
House Majority Leader Eric Cantor's spokesman Rory Cooper told CNN the decision to enact new legislation now was in direct response to the study.
"In December when we extended the STOCK Act deadline for public disclosure of Financial Disclosures, we required a study by the non-partisan and independent National Academy of Public Administration. This was their recommendation, and the House and Senate agreed it was the best course of action for the time being," Cooper told CNN in a written statement.
A senior House Democratic aide told CNN that after Congress received the report there were bipartisan discussions at the leadership level in the House and Senate. All agreed to move forward with language exempting all legislative aides along with executive branch employees.
"The study came back and very clearly said that this was an issue," this aide emphasized.
The Sunlight Foundation’s Rosenberg argued the exemption of these in federal agencies and Capitol offices, which she called an "epic failure," would result in "more corruption and less trust in government."
The bill now goes to the president for his signature.
of course, the House would vote to get rid of the key requirement in this law, transparent finances. the Senate, while Democratic, doesn't mind either because passing this law intact also affects them. ironic that this is the only thing that they have ever agreed on without the county making a controversy about it, and they likely won't, with other issues taking the bigger stage. Typical. this issue should have just as much precedence as other ones due. and the people that benefit from that ignorance will get away with it too.
Can we find out who voted for this bill and who voted against it?
So now they don't want the Law to effect them.
Who would have guess, What this country need is Term Limits
for all POLITICANS.
Incredible.....they outright repealed the law as soon as they felt the heat had died down. That's why they kept delaying it. They are not working for the peoples best interest and this insider trading proves they don't care about the public. They are using inside information to leave you as they bagholder in their stock transactions. Clear as a bell. Vote these fools out or there won't be anything left.
Nothing like making corruption even easier. The Whigs would have been proud...
The only security these people are worried about is their own. These people especially these people should have to follow the insider trading rules just like anybody else and excluding federal employees is criminal, at best. What a sham!!!!!!
Why isn't this on every new site in LARGE PRINT?
What a bunch of BS !
This only makes it easier for lobbyist and corporations to sway federal employees and elected officials .
Yep because the lobbyists, senators and wall street fat cats are NOT making enough money already, They need to further rig the system against the middle class. One loop hole closes for the rich while congress opens another.
That is good so my senator and house representive will be giving me insider trading info so I other retired people can make a lot of money of insider trading because they screwed up the economy.
Difficult to trust them any less
Basically, if you trust the government now, your not one who pays attention, and does not want to know what they do