II 112th CONGRESS 1st Session S. 1903 IN THE SENATE OF THE UNITED STATES November 17, 2011 Mrs. Gillibrand (for herself, Mr. Tester, Ms. Stabenow, Mr. Durbin, Mrs. McCaskill, Ms. Klobuchar, Mr. Rubio, and Mr. Blumenthal) introduced the following bill; which was read twice and referred to the Committee on Homeland Security and Governmental Affairs A BILL To prohibit commodities and securities trading based on nonpublic information relating to Congress, to require additional reporting by Members and employees of Congress of securities transactions, and for other purposes.

1.

Short title

This Act may be cited as the Stop Trading on Congressional Knowledge Act.

2.

Nonpublic information relating to Congress and other Federal employees

(a)

Commodities transactions

Section 4c of the Commodity Exchange Act (7 U.S.C. 6c) is amended by adding at the end the following: (h)

Nonpublic information

(1)

Definitions

In this subsection: (A)

Agency

The term agency has the meaning given the term in section 551 of title 5, United States Code. (B)

Material nonpublic information

The term material nonpublic information— (i)has the meaning given the term by the Commission by rule; (ii)includes any information that— (I)a member or employee of Congress, or an employee of an agency, as applicable, gains by reason of that position or employment; and (II)the member or employee knows or should know has not been made available to the general public; and (iii)includes information that— (I)is routinely exempt from disclosure under section 552 of title 5, United States Code, or otherwise protected from disclosure by law (including Executive orders and regulations); (II)is designated as confidential by an agency; or (III)has not actually been disseminated to the general public and is not authorized to be made available to the public on request. (2)

Nonpublic information relating to Congress

Not later than 270 days after the date of enactment of this subsection, the Commission shall by rule prohibit any person from buying or selling any commodity for future delivery or swap while the person is in possession of material nonpublic information relating to any pending or prospective legislative action relating to the commodity if— (A)(i)the information was obtained by reason of the person being a Member or employee of Congress; or (ii)(I)the information was obtained from a Member or employee of Congress; and (II)the person knows that the information was so obtained; and (B)the person acted with the intent to assist another person, directly or indirectly, to use the information to enter into, or offer to buy or sell the securities of such publicly traded company based on such information. (3)

Nonpublic information relating to other Federal employees

Not later than 270 days after the date of enactment of this subsection, the Commission shall by rule prohibit any person from buying or selling any commodity for future delivery or swap while the person is in possession of material nonpublic information derived from Federal employment and relating to the commodity if— (A)(i)the information was obtained by reason of the person being an employee of an agency; or (ii)(I)the information was obtained from an employee of an agency; and (II)the person knows that the information was so obtained; and (B)the person acted with the intent to assist another person, directly or indirectly, to use the information to enter into, or offer to buy or sell the securities of such publicly traded company based on such information. . (b)

Securities transactions

(1)

Definitions

As used in this subsection— (A)the term agency has the same meaning as in section 551(1) of title 5, United States Code; (B)the term Commission means the Securities and Exchange Commission; and (C)the term material nonpublic information— (i)has the meaning given that term by rule of the Commission; and (ii)includes any information that a member or employee of Congress or an employee of an agency, as applicable, gains by reason of such position or employment, and that such member or employee knows or should know has not been made available to the general public, including information that— (I)is routinely exempt from disclosure under section 552 of title 5, United States Code, or otherwise protected from disclosure by statute, Executive Order, or regulation; (II)is designated as confidential by an agency; or (III)has not actually been disseminated to the general public and is not authorized to be made available to the public on request. (2)

Nonpublic information relating to congress

Not later than 270 days after the date of enactment of this Act, the Commission shall, by rule, prohibit any person from buying or selling the securities or security-based swaps of any issuer while such person is in possession of material nonpublic information relating to any pending or prospective legislative action relating to such issuer, if— (A)(i)such information was obtained by reason of such person being a Member or employee of Congress; or (ii)such information was obtained from a Member or employee of Congress, and such person knows that the information was so obtained; (B)the person acted with the intent to assist another person, directly or indirectly, to use the information to enter into, or offer to buy or sell the securities of such publicly traded company based on such information. (3)

Nonpublic information relating to other Federal employees

Not later than 270 days after the date of enactment of this subsection, the Commission shall, by rule, prohibit any person from buying or selling the securities or security-based swaps of any issuer while such person is in possession of material nonpublic information derived from Federal employment and relating to such issuer, if— (A)(i)such information was obtained by reason of such person being an employee of an agency; or (ii)such information was obtained from such an employee, and such person knows that the information was so obtained; and (B)the person acted with the intent to assist another person, directly or indirectly, to use the information to enter into, or offer to buy or sell the securities of such publicly traded company based on such information.

3.

Amendment to the rules of the Senate regarding financial trading based on nonpublic information

Rule XXXVII of the Standing Rules of the Senate is amended by— (1)redesignating paragraph 15 as paragraph 16; and (2)inserting at the end the following: 15.A Member, officer, or employee of the Senate shall not— (1)disclose material nonpublic information relating to any pending or prospective legislative action relating to any publicly traded company if that Member, officer, or employee acts with the intent to assist another person, directly or indirectly, to use the information to enter into, or offer to buy or sell the securities of such publicly traded company based on such information; or (2)disclose material nonpublic information relating to any pending or prospective legislative action relating to any commodity if that Member, officer, or employee acts with the intent to assist another person, directly or indirectly, to use the information to enter into, or offer to buy or sell the securities of such publicly traded company based on such information. .

4.

Timely reporting of financial transactions

(a)

Reporting requirement

Section 103 of the Ethics in Government Act of 1978 is amended by adding at the end the following subsection: (l)Within 90 days after the purchase, sale, or exchange of any stocks, bonds, commodities futures, or other forms of securities that are otherwise required to be reported under this Act and the transaction of which involves at least $1,000 by any Member of Congress or officer or employee of the legislative branch required to so file, that Member, officer, or employee shall file a report of that transaction with the Clerk of the House of Representatives in the case of a Representative in Congress, a Delegate to Congress, or the Resident Commissioner from Puerto Rico, or with the Secretary of the Senate in the case of a Senator. . (b)

Effective date

The amendment made by subsection (a) shall apply to transactions occurring on or after the date that is 90 days after the date of the enactment of this Act.

5.

Disclosure of political intelligence activities under Lobbying Disclosure Act

(a)

Definitions

Section 3 of the Lobbying Disclosure Act of 1995 (2 U.S.C. 1602) is amended— (1)in paragraph (2)— (A)by inserting after lobbying activities each place that term appears the following: or political intelligence activities; and (B)by inserting after lobbyists the following: or political intelligence consultants; and (2)by adding at the end the following new paragraphs: (17)

Political intelligence activities

The term political intelligence activities means political intelligence contacts and efforts in support of such contacts, including preparation and planning activities, research, and other background work that is intended, at the time it is performed, for use in contacts, and coordination with such contacts and efforts of others. (18)

Political intelligence contact

(A)

Definition

The term political intelligence contact means any oral or written communication (including an electronic communication) to or from a covered executive branch official or a covered legislative branch official, the information derived from which is intended for use in analyzing securities or commodities markets, or in informing investment decisions, and which is made on behalf of a client with regard to— (i)the formulation, modification, or adoption of Federal legislation (including legislative proposals); (ii)the formulation, modification, or adoption of a Federal rule, regulation, Executive order, or any other program, policy, or position of the United States Government; or (iii)the administration or execution of a Federal program or policy (including the negotiation, award, or administration of a Federal contract, grant, loan, permit, or license). (B)

Exception

The term political intelligence contact does not include a communication that is made by or to a representative of the media if the purpose of the communication is gathering and disseminating news and information to the public. (19)

Political intelligence firm

The term political intelligence firm means a person or entity that has 1 or more employees who are political intelligence consultants to a client other than that person or entity. (20)

Political intelligence consultant

The term political intelligence consultant means any individual who is employed or retained by a client for financial or other compensation for services that include one or more political intelligence contacts. . (b)

Registration requirement

Section 4 of the Lobbying Disclosure Act of 1995 (2 U.S.C. 1603) is amended— (1)in subsection (a)— (A)in paragraph (1)— (i)by inserting after whichever is earlier, the following: or a political intelligence consultant first makes a political intelligence contact,; and (ii)by inserting after such lobbyist each place that term appears the following: or consultant; (B)in paragraph (2), by inserting after lobbyists each place that term appears the following: or political intelligence consultants; and (C)in paragraph (3)(A)— (i)by inserting after lobbying activities each place that term appears the following: and political intelligence activities; and (ii)in clause (i), by inserting after lobbying firm the following: or political intelligence firm; (2)in subsection (b)— (A)in paragraph (3), by inserting after lobbying activities each place that term appears the following: or political intelligence activities; (B)in paragraph (4)— (i)in the matter preceding subparagraph (A), by inserting after lobbying activities the following: or political intelligence activities; and (ii)in subparagraph (C), by inserting after lobbying activity the following: or political intelligence activity; (C)in paragraph (5), by inserting after lobbying activities each place that term appears the following: or political intelligence activities; (D)in paragraph (6), by inserting after lobbyist each place that term appears the following: or political intelligence consultant; and (E)in the matter following paragraph (6), by inserting or political intelligence activities after such lobbying activities; (3)in subsection (c)— (A)in paragraph (1), by inserting after lobbying contacts the following: or political intelligence contacts; and (B)in paragraph (2)— (i)by inserting after lobbying contact the following: or political intelligence contact; and (ii)by inserting after lobbying contacts the following: and political intelligence contacts; and (4)in subsection (d), by inserting after lobbying activities each place that term appears the following: or political intelligence activities. (c)

Reports by registered political intelligence consultants

Section 5 of the Lobbying Disclosure Act of 1995 (2 U.S.C. 1604) is amended— (1)in subsection (a), by inserting after lobbying activities the following: and political intelligence activities; (2)in subsection (b)— (A)in paragraph (2)— (i)in the matter preceding subparagraph (A), by inserting after lobbying activities the following: or political intelligence activities; (ii)in subparagraph (A)— (I)by inserting after lobbyist the following: or political intelligence consultant; and (II)by inserting after lobbying activities the following: or political intelligence activities; (iii)in subparagraph (B), by inserting after lobbyists the following: and political intelligence consultants; and (iv)in subparagraph (C), by inserting after lobbyists the following: or political intelligence consultants; (B)in paragraph (3)— (i)by inserting after lobbying firm the following: or political intelligence firm; and (ii)by inserting after lobbying activities each place that term appears the following: or political intelligence activities; and (C)in paragraph (4), by inserting after lobbying activities each place that term appears the following: or political intelligence activities; and (3)in subsection (d)(1), in the matter preceding subparagraph (A), by inserting or a political intelligence consultant after a lobbyist. (d)

Disclosure and enforcement

Section 6(a) of the Lobbying Disclosure Act of 1995 (2 U.S.C. 1605) is amended— (1)in paragraph (3)(A), by inserting after lobbying firms the following: , political intelligence consultants, political intelligence firms,; (2)in paragraph (7), by striking or lobbying firm and inserting lobbying firm, political intelligence consultant, or political intelligence firm; and (3)in paragraph (8), by striking or lobbying firm and inserting lobbying firm, political intelligence consultant, or political intelligence firm. (e)

Rules of construction

Section 8(b) of the Lobbying Disclosure Act of 1995 (2 U.S.C. 1607(b)) is amended by striking or lobbying contacts and inserting lobbying contacts, political intelligence activities, or political intelligence contacts. (f)

Identification of clients and covered officials

Section 14 of the Lobbying Disclosure Act of 1995 (2 U.S.C. 1609) is amended— (1)in subsection (a)— (A)in the heading, by inserting or political intelligence after lobbying; (B)by inserting or political intelligence contact after lobbying contact each place that term appears; and (C)in paragraph (2), by inserting or political intelligence activity, as the case may be after lobbying activity; (2)in subsection (b)— (A)in the heading, by inserting or political intelligence after lobbying; (B)by inserting or political intelligence contact after lobbying contact each place that term appears; and (C)in paragraph (2), by inserting or political intelligence activity, as the case may be after lobbying activity; and (3)in subsection (c), by inserting or political intelligence contact after lobbying contact. (g)

Annual audits and reports by Comptroller General

Section 26 of the Lobbying Disclosure Act of 1995 (2 U.S.C. 1614) is amended— (1)in subsection (a)— (A)by inserting political intelligence firms, political intelligence consultants, after lobbying firms; and (B)by striking lobbying registrations and inserting registrations; (2)in subsection (b)(1)(A), by inserting political intelligence firms, political intelligence consultants, after lobbying firms; and (3)in subsection (c), by inserting or political intelligence consultant after a lobbyist.

6.

Effective date

Subject to section 5(b), this Act and the amendments made by this Act shall take effect at the end of the 90-day period beginning on the date of the enactment of this Act.