[Congressional Record (Bound Edition), Volume 158 (2012), Part 1]
[Senate]
[Pages 406-413]
[From the U.S. Government Publishing Office, www.gpo.gov]




     STOP TRADING ON CONGRESSIONAL KNOWLEDGE ACT--MOTION TO PROCEED

  The ACTING PRESIDENT pro tempore. Under the previous order, the 
Senate will resume consideration of the motion to proceed to S. 2038, 
which the clerk will report.
  The legislative clerk read as follows:

       Motion to proceed to the consideration of S. 2038, a bill 
     to prohibit Members of Congress and employees of Congress 
     from using nonpublic information derived from their official 
     positions for personal benefit, and for other purposes.

  The ACTING PRESIDENT pro tempore. Under the previous order, the time 
until 5:30 p.m. will be equally divided and controlled between the two 
leaders or their designees.
  The Senator from Connecticut.
  Mr. LIEBERMAN. I thank the Chair. Mr. President, I want to begin 
debate, and I do so with gratitude that the distinguished ranking 
member Senator Collins is here, as well as Senator Brown of 
Massachusetts, whose original legislation, along with Senator 
Gillibrand, forms the basis of this proposal that comes out of our 
committee.
  I want to go back to the beginning, to President Washington, whose 
Farewell Address seems to take on more relevance as time goes by, 
although it is obviously more than 200 years old now. Washington said 
in his Farewell Address that ``virtue or morality is a necessary spring 
of popular government'' and that we cannot ``look with indifference'' 
at anything that shakes that foundation or, continuing his metaphor, 
dries the spring.
  I think we have to say in the long proud course of American history 
since then there have been very few times where the springs of trust in 
popular government have been more dry than they are in our time.
  I am grateful my colleague Senator McCain is not on the Senate floor 
now because when we get to this subject, he usually says: When you look 
at the public opinion polls on Congress, the numbers of people who have 
a favorable impression of this body are so low we are down to close 
relatives and paid staff. Usually, when I am with him, I add: I'm not 
so sure about all the paid staff.
  But, in any case, we have an opportunity with this piece of 
legislation to take a small step forward toward rebuilding public trust 
in Congress and to restoring those necessary springs of popular 
government--the trust of the people in us. This goes back just to last 
fall and early winter. A book appeared by an author named Peter 
Schweizer who was then interviewed on ``60 Minutes.'' He made 
allegations that some Members of Congress and their staffs have used 
information gained on their jobs to enrich themselves with timely 
investments, particularly in the stock market. Those allegations, as 
Washington might have said, certainly dried the springs of trust that 
we should have with the American people, even more than they already 
are.
  So today I am proud to rise to bring before the Senate the STOCK Act, 
which stands for Stop Trading on Congressional Knowledge Act of 2012. 
This piece of legislation puts into law language and reporting 
requirements that will make it clear to the American people we 
understand being a Member of Congress means we have a responsibility to 
the public, a public trust, and any Member of Congress or staff member 
here who violates that trust will be punished.
  This bill was reported as an original bill out of the Committee on 
Homeland Security and Governmental Affairs on December 14 with a 
bipartisan vote of 7 to 2. In advancing this bill, as I have said, 
Senator Collins and I worked closely with Senators Gillibrand and Brown 
of Massachusetts, both of whom sponsored versions of the STOCK Act. 
Senator Levin, who has just spoken, worked closely with us on the 
substitute amendment that will be filed, and I thank them all for their 
contributions on this piece of legislation. I also thank the Senate 
majority leader, Senator Reid, for deciding this important piece of 
legislation would be one of the first items we take up in Congress this 
year.
  The specific rules making insider trading illegal are found in a 
large body of Securities and Exchange Commission regulatory activities 
pursuant to section 10(b) of the Securities Exchange Act of 1934 and 
court decisions interpreting those activities. Our Committee on 
Homeland Security and Governmental Affairs held a hearing on this topic 
in December, and the Securities and Exchange Commission actually filed 
a statement with us for the record declaring its belief that currently 
there is authority in the law to investigate and prosecute 
congressional insider trading cases. The chief enforcement officer of 
the SEC said:

       Trading by congressional members or their staffs is not 
     exempt from the Federal securities laws, including the 
     insider trading prohibitions.

  But other witnesses at that hearing, including Georgetown University 
Law Professor Donald Langevoort and Columbia Law School Professor John 
Coffee told us that while the SEC might be technically right, in their 
opinion there was ambiguity in the law and they couldn't be sure how a 
court would rule if there was a challenge to the SEC's authority to 
bring an insider trading case against a Member of Congress or a staff 
member.
  That is because, as the professors explained, a person may be found 
to have violated insider trading laws only if he or she breaks a 
fiduciary duty, a duty of trust and confidence owed to somebody--
typically to the shareholders of a company or to the source of the 
nonpublic information. They argued it is possible a judge might decide 
that Members of Congress do not have a fiduciary duty--in the way in 
which it has normally been interpreted--to anyone with respect to the 
nonpublic information that we receive while carrying out our duties.
  Now, I must say that I find it hard to see it that way. It seems to 
me self-evident that a public office is a public trust and that Members 
of Congress have a duty to the institution of Congress, of course to 
the government as a whole, and ultimately, most importantly, to the 
American people not to use information gained during their time in 
Congress--and unavailable to the public--to make investments for 
personal benefit. But the fact is there are some very experienced and 
intelligent legal experts who told our committee they couldn't certify 
a judge would see it exactly that way.
  That is the first purpose of this act, the STOCK Act: to clarify the 
ambiguity of securities law by explicitly stating that Members of 
Congress and our staffs have a duty of trust to the institution of 
Congress, to the United States Government, and to the American people--
a duty that Members of Congress violate if we trade on nonpublic 
information we gain by virtue of our public position.
  The bill also requires the ethics committees of both Houses of 
Congress to issue guidance to clarify that Members and staff may not 
use nonpublic information derived from their positions in Congress to 
make a private profit.
  Besides these changes--and this is different and important--our 
committee decided the STOCK Act should require Members of Congress and 
their staffs to file public reports on our purchases or sale of stocks, 
bonds, commodities, futures, or other financial transactions exceeding 
$1,000 in value within 30 days of the transaction. Right now, as the 
Acting President of the Senate knows, these trades are reported once a 
year in our annual disclosure statements. This proposal would change 
that to within 30 days of the trade.
  More timely reporting of this kind will allow not just the SEC but 
the public to assess whether there is anything suspicious or wrong 
about the timing of the trade and conduct in the Senate. That kind of 
real transparency will be an additional deterrent to unethical or 
illegal behavior.
  The bill also contains another important provision offered in 
committee by Senators Jon Tester and Mark Begich that will require the 
financial disclosure forms filed by Members and staff

[[Page 407]]

to be filed electronically and perhaps even more significantly, 
therefore, be available online for public review. The fact is, our 
reports are now available for public review. But people have to go to 
the Office of the Secretary of the Senate and ask for copies of them. 
There is no sensible reason to make someone physically come to the 
House or Senate to see a copy of one of our financial disclosure forms. 
They are public records and they ought to be easily available to the 
public online, and this proposal will make sure that happens.
  Those are the three major provisions of the proposal, as I see it: to 
affirm a clear fiduciary duty under the insider trading law so it is 
clear Members of Congress and our staffs are covered by them; secondly, 
to require disclosure of trades in excess of $1,000 within 30 days; 
and, third, that those trades and our annual financial report will be 
electronically filed and, therefore, be available online.
  May I say, as we begin the second session of the 112th session of 
Congress, we begin with so much distrust of our Federal Government that 
I think passing the STOCK Act could have a positive effect on how we 
are being perceived, and particularly if, as I hope, we pass it on a 
bipartisan basis. The STOCK Act was passed out of our committee in 
exactly that way. I believe it has the support of Members and leaders 
of both parties in the House and Senate, and President Obama has 
promised to sign it as soon as it comes to his desk.
  So let me end by quoting again from our first President, this time 
from his Inaugural Address, where he set the ideals for the new 
government that our country would have. He said:

       The foundations of our national policy will be laid in the 
     pure and immutable principles of private morality . . . and 
     the preeminence of free government [will] be exemplified by 
     all the attributes which can win the affections of its 
     citizens and command the respect of the world.

  Enacting this proposal into law will say to our disappointed, our 
skeptical, our troubled constituents that we understand and accept 
Washington's wisdom.
  I thank the Chair, and at this time I yield to my dear friend, the 
distinguished ranking member of our committee, Senator Collins.
  The ACTING PRESIDENT pro tempore. The Senator from Maine.
  Ms. COLLINS. Mr. President, I am pleased to join today the chairman 
of our committee, Senator Lieberman, and the sponsor of this bill, 
Senator Scott Brown, in urging our colleagues to begin consideration of 
what is known as the STOCK Act.
  This legislation is based on a bill that was first introduced in the 
Senate by Senator Scott Brown and a similar one introduced by Senator 
Gillibrand. Put simply, the STOCK Act is intended to ensure that 
Members of Congress do not profit from trading on insider information.
  As a cosponsor of Senator Brown's bill, I wish to commend him for his 
leadership in this area. I also wish to recognize Chairman Lieberman 
for moving this important bill forward in such an expeditious manner.
  Press reports on ``60 Minutes'' and elsewhere have raised questions 
about whether lawmakers have been exempt, either legally or 
practically, from the reach of our laws prohibiting insider trading. At 
a time when polls show record low public confidence in Congress, there 
is a strong desire on our part to address the concerns that underpin 
the public's skepticism and assure the American people that we are 
putting their interests ahead of our own.
  The STOCK Act is intended to affirm that Members of Congress are not 
exempt from our laws prohibiting insider trading. While several of the 
witnesses who appeared before our committee's hearing on this bill 
testified that there is no legal exemption for Members of Congress, 
confusion and uncertainty nevertheless persists. For example, on the 
eve of our markup, the Wall Street Journal published an op-ed by a Yale 
law professor who wrote that ``the Securities and Exchange Commission 
has determined that insider trading laws do not apply to Members of 
Congress or their staff.''
  This, however, is directly contradicted by the statement for the 
record submitted to the committee by the SEC's Enforcement Director who 
said: ``There is no reason why trading by Members of Congress or their 
staff members should be considered exempt from the Federal securities 
laws, including trading prohibitions.''
  I ask unanimous consent to have printed in the Record the SEC 
statement at the conclusion of my comments.
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered.
  (See exhibit 1.)
  Ms. COLLINS. Mr. President, to me, this illustrates the confusion 
over this issue. So I am pleased the committee not only reported 
Senator Brown's bill but unanimously adopted an amendment I offered 
with Chairman Lieberman that states clearly that Members and their 
staff are not exempt from insider trading laws.
  The need for this unambiguous statement can likely be traced back to 
the nature of the insider trading laws. As our committee has learned, 
our Nation's insider trading laws are not, generally speaking, based on 
statutes passed by Congress but rather on court precedents. As one of 
our witnesses, law professor Donna Nagy from Indiana University, 
pointed out during our hearing:

       Congress has never enacted a Federal securities statute 
     that explicitly prohibits anyone from insider trading. . . . 
     The explicit statutory ban on insider trading . . . is 
     entirely absent in U.S. securities law.

  Rather, the SEC pursues insider trading cases under the general 
antifraud provisions of the Federal securities laws, most commonly 
section 10B of the Securities Exchange Act of 1934 and rule 10b5, a 
broad antifraud rule promulgated by the Commission. Therefore, what 
constitutes insider trading has largely been determined by the courts, 
including the Supreme Court, on a case-by-case basis.
  Under the case law, two different types or theories of insider 
trading violations have developed; one where the defendant is a classic 
corporate insider using nonpublic information to trade on the company's 
stock and a second where the defendant has misappropriated inside 
information in violation of a duty owed to the source of the 
information, such as a lawyer who trades on advanced notice of a 
business transaction. Both types of cases, however, share common 
elements:
  There must be a breach of a duty, such as a traditional fiduciary 
duty or a duty of trust and confidence; the breach must involve 
material information, which is the type of information a reasonable 
investor would consider important in making a decision to buy or sell 
stock; the information must be nonpublic; and the defendant must 
receive a personal benefit, which the Supreme Court has said may 
include not only financial gain but also reputational benefits.
  As the Supreme Court has held, under section 10B, the chargeable 
conduct must involve a deceptive device or contrivance used in 
connection with the purchase or sale of securities. In criminal 
prosecutions for insider trading, under rule 10b5, the government must 
prove that a person willfully violated the provision with culpable 
intent.
  Although the witnesses who came before the committee generally agreed 
that Congress enjoys no exemption from insider trading laws, they also 
stressed the need to clarify the relevant duty that applies to Members.
  The bill reported by the committee, in language refined by Senator 
Levin, addressed this issue by affirming a duty arising from the 
relationship of trust and confidence already owed by Members and their 
staff to the Congress, the U.S. Government, and the citizens we serve. 
At our markup, we clarified that this does not create a new fiduciary 
duty, in the traditional sense, but rather recognizes or affirms our 
existing duty.
  As reported, the bill would also have amended the Congressional 
Accountability Act to prohibit Members and staff from using nonpublic 
information gained through the performance of

[[Page 408]]

their official duties for personal benefit. This proposed prohibition, 
however, was not limited to the trading context or otherwise tethered 
to financial transactions. Because it was not anchored in financial 
transactions, I expressed some concerns about the potential breadth of 
this term and the potential for unintended consequences.
  These concerns were echoed by several members of the committee during 
our consideration of the bill. Therefore, following the markup, we 
continued to refine the bill while adhering to the fundamental 
principle that Members of Congress should be subject to the same 
insider trading laws as other Americans. I believe we have come up with 
a solution that addresses the potential problem that troubles all of 
us; that is, public officials using public office for private gain. We 
need, however, to make sure that in doing so, we do not inhibit our 
ability to gather information so we can serve our constituents to the 
best of our ability.
  The proposed substitute offered by Senator Reid, Senator Brown, and 
Senator Lieberman reflects the work of our committee members as well as 
other bill sponsors. It would require the Senate Ethics Committee and 
the House Committee on Standards of Official Conduct to issue guidance 
on the relevant rules of each Chamber, clarifying that Members and 
staff may not use nonpublic information derived from their positions in 
Congress to make a personal profit. This would cover insider trading 
matters, as well as land deals and other financial transactions where 
nonpublic information could be wrongly converted into a private gain.
  Similar to the reported bill, the substitute includes a 
straightforward statement making clear that Members and their staff are 
not exempt from insider trading prohibitions arising from the 
securities laws.
  In keeping with an amendment that Senator Paul successfully offered 
at our markup, the substitute applies the same framework--clarification 
of the prohibition against using nonpublic information for private 
profit and the affirmation of existing duty that we have--to the 
employees of the executive and judicial branches, as well as the 
legislative branch. Similar to the reported bill, the substitute 
includes earlier deadlines for financial reporting requirements and 
greater transparency for financial disclosure statements, as the 
chairman mentioned, by requiring that they be available online and in a 
searchable format.
  I believe we need to reassure a skeptical public that we understand 
that elective office is a place for public service, not private gain; 
that it is an honor and a trust we have been given by the people we 
represent. Underscoring that important message is clearly the intent of 
this bill, and that is why I support it.
  I urge my colleagues to vote yes to vote to invoke cloture on the 
motion to proceed.

                               Exhibit 1

      [From U.S. Securities and Exchange Commission, Dec. 1, 2011]

   Statement on the Application of Insider Trading Law to Trading by 
 Members of Congress and Their Staffs, Before the United States Senate 
        Committee on Homeland Security and Governmental Affairs

                          (By Robert Khuzami)

       Chairman Lieberman, Ranking Member Collins, and Members of 
     the Committee:
       Thank you for the opportunity to provide a statement for 
     the record on behalf of the U.S. Securities and Exchange 
     Commission on the subject of insider trading.
       Insider trading threatens the integrity of our markets, 
     depriving investors of the fundamental fairness of a level 
     playing field. To deter this conduct and to hold accountable 
     those who fail to play by the rules, the detection and 
     prosecution of those who engage in insider trading remains 
     one of the Division of Enforcement's highest priorities.
       My statement provides a summary of the Division of 
     Enforcement's recent work in the area of insider trading, an 
     overview of the law of insider trading as developed through 
     our enforcement program and judicial precedent, and a 
     description of how the current law of insider trading applies 
     to securities trading by Members of Congress and their 
     staffs.


                 Enforcement's Insider Trading Program

       Insider trading has long been a high priority for the 
     Commission. Approximately eight percent of the 650 average 
     annual number of enforcement cases filed by the Commission in 
     the past decade have been for insider trading violations. In 
     the past two years, the Commission has been particularly 
     active in this area. In fiscal year 2010, the SEC brought 53 
     insider trading cases against 138 individuals and entities, a 
     43 percent increase in the number of filed cases from the 
     prior fiscal year. This past fiscal year, the Commission 
     filed 57 actions against 124 individuals and entities, a 
     nearly 8 percent increase over the number of filed cases in 
     fiscal year 2010.
       The increased number of insider trading cases has been 
     matched by an increase in the quality and significance of our 
     recent cases. In fiscal year 2011 and the early part of 
     fiscal year 2012, the SEC obtained judgments in 18 actions 
     arising out of its investigation of Galleon hedge fund 
     founder Raj Rajaratnam, including a record $92.8 million 
     civil penalty against Rajaratnam personally. The SEC also 
     discovered and developed information that ultimately led to 
     criminal convictions of Rajaratnam and others, including 
     corporate executives and hedge fund managers, for rampant 
     insider trading. In addition, we recently filed an insider 
     trading action against Rajat Gupta, a former director of both 
     Goldman Sachs and Procter & Gamble, whom we allege provided 
     confidential Board information about both companies' 
     quarterly earnings and about an impending $5 billion 
     Berkshire Hathaway investment in Goldman Sachs to Rajaratnam, 
     who traded on that information.
       Among others charged in SEC insider trading cases in the 
     past fiscal year were various hedge fund managers and traders 
     involved in a $30 million expert networking trading scheme, a 
     former Nasdaq Managing Director, a former Major League 
     Baseball player, a Food and Drug Administration chemist, and 
     a former corporate attorney and a Wall Street trader who 
     traded in advance of mergers involving clients of the 
     attorney's law firm. The SEC also brought insider trading 
     cases charging a Goldman Sachs employee and his father with 
     trading on confidential information learned by the employee 
     on the firm's ETF desk, and charging a corporate board member 
     of a major energy company and his son for trading on 
     confidential information about the impending takeover of the 
     company.
       The Division also has targeted non-traditional cases 
     involving the misuse or mishandling of material, non-public 
     information. This past fiscal year, the Commission charged 
     Merrill Lynch, Pierce, Fenner & Smith with fraud for 
     improperly accessing and misusing customer order information 
     for the firm's own benefit. The Commission also censured 
     broker-dealer Janney Montgomery Scott LLC for failing to 
     enforce its own policies and procedures designed to prevent 
     the misuse of material, nonpublic information. Charles Schwab 
     Investment Management was charged for failing to have 
     appropriate information barriers for nonpublic and 
     potentially material information concerning an ultra-short 
     bond fund that suffered significant declines during the 
     financial crises. This deficiency gave other Schwab-related 
     funds an unfair advantage over other investors by allowing 
     the funds to redeem their own investments in the ultra short-
     bond fund during its decline. The Commission also charged 
     Office Depot, Inc. and two of its executives for violating 
     Regulation FD by selectively disclosing to certain analysts 
     and institutional investors that the company would not meet 
     its earnings.
       To respond to emerging risks, the Enforcement Division has 
     developed several new initiatives targeted at ferreting out 
     insider trading, which have enhanced our effectiveness in 
     this area. During our recent reorganization, the Division 
     established a Market Abuse Unit, with an emphasis on various 
     abusive market strategies and practices, including complex 
     insider trading schemes.
       The Market Abuse Unit has spearheaded the Division's 
     Automated Bluesheet Analysis Project, an innovative 
     investigative tool that utilizes the ``bluesheet'' database 
     of more than one billion electronic equities and options 
     trading records obtained by the Commission in the course of 
     insider trading investigations over the past 20 years. Using 
     newly developed templates, Enforcement staff are able to 
     search across this database to recognize suspicious trading 
     patterns and identify relationships and connections among 
     multiple traders and across multiple securities, generating 
     significant enforcement leads and investigative entry points. 
     While still in its early stages of development, this new data 
     analytic approach already has led to significant insider 
     trading enforcement actions that were not the subject of an 
     SRO referral, informant tip, investor complaint, media 
     report, or other external source.
       As part of the reorganization, the Division also 
     established a cooperation program to encourage key fact 
     witnesses to provide valuable information. Insider trading 
     investigations are extremely fact-intensive. Enforcement 
     staff undertake the often painstaking work of collecting and 
     analyzing trading data across equity and options markets, 
     analyzing communications (email, telephone calls and instant 
     messages, among others) and analyzing market-moving events 
     (e.g.,

[[Page 409]]

     announcements of corporate earnings, product development, and 
     acquisitions and mergers) to identify persons who may have 
     engaged in insider trading or who may have information about 
     such activity. Our new cooperation program is a valuable tool 
     that can help us break open an insider trading investigation 
     earlier in the process, thereby preserving resources. We are 
     already seeing the effectiveness of the cooperation program 
     in our insider trading cases and expect this trend to 
     continue as more cooperators come forward in our 
     investigations.
       With an aggressive investigative approach that includes 
     early coordination with the FBI, Department of Justice, and 
     other law enforcement agencies, we have been able to identify 
     potential cooperators who may assist criminal authorities 
     with their covert investigative techniques, helping amass 
     critical evidence in numerous insider trading investigations. 
     Our work with certain SROs has provided valuable early tips, 
     helping us mitigate the harm from insider trading schemes by 
     freezing the illicit proceeds before funds are moved to 
     offshore jurisdictions.


                         Law of Insider Trading

       There is no express statutory definition of the offense of 
     insider trading in securities. The SEC prosecutes insider 
     trading under the general antifraud provisions of the Federal 
     securities laws, most commonly Section 10(b) of the 
     Securities Exchange Act of 1934 (``Exchange Act'') and Rule 
     10b-5, a broad anti-fraud rule promulgated by the SEC under 
     Section 10(b). Section 10(b) declares it unlawful ``[t]o use 
     or employ, in connection with the purchase or sale of any 
     security . . . any manipulative or deceptive device or 
     contrivance in contravention of such rules and regulations as 
     the Commission may prescribe as necessary or appropriate in 
     the public interest or for the protection of investors.'' 
     Rule 10b-5 broadly prohibits fraud and deception in 
     connection with the purchase and sale of securities. As the 
     Supreme Court has stated, ``Section 10(b) and Rule 10b-5 
     prohibit all fraudulent schemes in connection with the 
     purchase or sale of securities, whether the artifices 
     employed involve a garden type variety of fraud, or present a 
     unique form of deception,'' because ``[n]ovel or atypical 
     methods should not provide immunity from the securities 
     laws.''
       There are two principal theories under which the SEC 
     prosecutes insider trading cases under Section 10(b) and Rule 
     10b-5. The ``classical theory'' applies to corporate 
     insiders--officers, directors, and employees of a 
     corporation, as well as ``temporary'' insiders, such as 
     attorneys, accountants, and consultants to the corporation. 
     Under the ``classical theory'' of insider trading liability, 
     a corporate insider violates Section 10(b) and Rule 10b-5 
     when he or she trades in the securities of the corporation on 
     the basis of material, nonpublic information. Trading on such 
     information qualifies as a ``deceptive device'' under Section 
     10(b), because ``a relationship of trust and confidence 
     [exists] between the shareholders of a corporation and those 
     insiders who have obtained confidential information by reason 
     of their position with that corporation.'' That relationship 
     ``gives rise to a duty to disclose [or to abstain from 
     trading] because of the `necessity of preventing a corporate 
     insider from . . . tak[ing] unfair advantage of . . . 
     uninformed . . . stockholders.'''
       The Supreme Court has recognized that corporate 
     ``outsiders'' can also be liable for insider trading under 
     the ``misappropriation theory.'' Under this theory, a person 
     commits fraud ``in connection with'' a securities 
     transaction, and thereby violates Section 10(b) and Rule 10b-
     5, when he or she misappropriates confidential and material 
     information for securities trading purposes, in breach of a 
     duty owed to the source of the information. This is because 
     ``a fiduciary's undisclosed, self-serving use of a 
     principal's information to purchase or sell securities, in 
     breach of a duty of loyalty and confidentiality, defrauds the 
     principal of the exclusive use of that information.'' The 
     misappropriation theory thus ``premises liability on a 
     fiduciary-turned-trader's deception of those who entrusted 
     him with access to confidential information.'' Under either 
     the classical or misappropriation theory, a person can also 
     be held liable for ``tipping'' material, nonpublic 
     information to others who trade, and a ``tippee'' can be held 
     liable for trading on such information.
       A common law principle is that employees owe a fiduciary 
     duty of loyalty and confidence to their employers. In 
     addition, employees often take on contractual duties of trust 
     or confidence as a condition of their employment or by 
     agreeing to comply with a corporate policy. Accordingly, 
     employees have frequently been held liable under the 
     misappropriation theory for trading or tipping on the basis 
     of material non-public information obtained during the course 
     of their employment. This includes prosecution of federal 
     employees who, in breach of a duty to their employer, the 
     federal government, trade or tip on the basis of information 
     they obtained in the course of their employment. For example, 
     the SEC recently brought insider trading charges against a 
     Food and Drug Administration employee alleging that he 
     violated a duty of trust and confidence owed to the federal 
     government under certain governmental rules of conduct when 
     he traded in advance of confidential FDA drug approval 
     announcements.
       In light of existing precedent regarding the liability of 
     employees--including federal employees--for insider trading, 
     any statutory changes in this area should be carefully 
     calibrated to ensure that they do not narrow current law and 
     thereby make it more difficult to bring future insider 
     trading actions against any such persons.


 Application of Insider Trading Law to Trading by Members of Congress 
                            and Their Staff

       The general legal principles described above apply to all 
     trading within the scope of Section 10(b) and Rule 10b-5. 
     There is no reason why trading by Members of Congress or 
     their staff members would be considered ``exempt'' from the 
     federal securities laws, including the insider trading 
     prohibitions, though the application of these principles to 
     such trading, particularly in the case of Members of 
     Congress, is without direct precedent and may present some 
     unique issues.
       Just as in any other insider trading inquiry, there are 
     several fact-intensive questions--including the existence and 
     nature of the duty being breached and both the materiality 
     and nonpublic nature of the information--that would drive the 
     analysis of whether securities trading (or tipping) by a 
     Member of Congress or staff member based on information 
     learned in an official capacity violates Section 10(b) and 
     Rule 10b-5.
       The first question is whether the trading, or communicating 
     the information to someone else, breached a duty owed by the 
     Member or staff. Although there is no direct precedent for 
     Congressional staff, there is case law from other employment 
     contexts regarding misappropriation of information gained 
     through an employment relationship. This precedent is 
     consistent with a claim that Congressional staff, as 
     employees, owe a duty of trust and confidence to their 
     employer and that a Congressional staff member who trades on 
     the basis of material non-public information obtained through 
     his or her employment is potentially liable for insider 
     trading under the misappropriation theory, like any other 
     non-governmental employee.
       The question of duty is more novel for Members of Congress. 
     There does not appear to be any case law that addresses the 
     duty of a Member with respect to trading on the basis of 
     information the Member learns in an official capacity. 
     However, in a variety of other contexts, courts have held 
     that ``[a] public official stands in a fiduciary relationship 
     with the United States, through those by whom he is appointed 
     or elected.'' Commenters have differed on whether securities 
     trading by a Member based on information learned in his or 
     her capacity as a Member of Congress violates the fiduciary 
     duty he or she owes to the United States and its citizens, or 
     to the Federal Government as his or her employer.
       Existing Congressional ethics rules also may be relevant to 
     the analysis of duty for both Members and their staff. For 
     example, Paragraph 8 of the Code of Ethics for Government 
     Service provides that ``Any person in Government service 
     should . . . [n]ever use any information coming to him 
     confidentially in the performance of governmental duties as a 
     means for making private profit.''
       The second question is whether the information on which the 
     Member or staff trades (or tips) is ``material''--that is, is 
     there ``a substantial likelihood'' that a reasonable investor 
     ``would consider it important'' in making an investment 
     decision? Materiality is a mixed question of fact and law 
     that depends on all the relevant circumstances. In some 
     scenarios, it may be relatively clear that an upcoming 
     Congressional action would be material to a particular issuer 
     or group of issuers, while in others it may be more 
     challenging to establish that.
       The third critical question is whether the information on 
     which the Member or staff traded (or tipped) is 
     ``nonpublic.'' The Commission has stated that ``[i]nformation 
     is nonpublic when it has not been disseminated in a manner 
     making it available to investors generally.'' Whether 
     information is ``nonpublic'' would likely depend on the 
     circumstances under which the Member or staff learned the 
     information and the extent to which the information had been 
     disseminated to the public.
       As with all issues of liability with regard to insider 
     trading and other claims under Section 10(b), the conduct at 
     issue must be intentional or reckless. Since all of these 
     issues are inherently fact-specific, it is difficult to 
     generalize about the likely outcome of any particular 
     scenario. However, trading by Congressional Members or their 
     staffs is not exempt from the federal securities laws, 
     including the insider trading prohibitions.


   Application of Tipper and Tippee Liability Theories to Members of 
                        Congress and Their Staff

       Communication of nonpublic information to others who either 
     trade on the information themselves or share it with others 
     for securities trading purposes, could be analyzed under the 
     case law relating to tipper and tippee liability and also 
     would turn on the specific facts of the case.
       A person can be liable as a tipper where he or she 
     discloses information in breach of a fiduciary duty or other 
     similar duty of trust

[[Page 410]]

     or confidence and the tippee trades on the basis of that 
     information. The same duty requirement described above is 
     applicable in the tipper context, as are the requirements 
     that the tipped information be nonpublic and material. In 
     addition, a court may require a showing that the Member of 
     Congress or staff member personally benefited from providing 
     the tip.
       A person who trades on the basis of material, nonpublic 
     information conveyed by a Member or staff member in breach of 
     a duty also could be liable for illegal insider trading as a 
     tippee. An additional element of liability is that the tippee 
     knew or should have known of the tipper's breach of duty in 
     disclosing the information.
       Investigations into potential trading or tipping by Members 
     of Congress or their staff could pose some unique issues, 
     including those that may arise from the Constitutional 
     privilege provided to Congress under the Speech or Debate 
     Clause, U.S. Const. art. I, Sec. 6, cl.1. The Supreme Court 
     has stated that ``[t]he Speech or Debate Clause was designed 
     to assure a co-equal branch of the government wide freedom of 
     speech, debate, and deliberation without intimidation or 
     threats from the Executive Branch.'' The Clause ``protects 
     Members against prosecutions that directly impinge or 
     threaten the legislative process.'' While the ``heart'' of 
     the privilege is speech or debate in Congress, courts have 
     extended the privilege to matters beyond pure speech and 
     debate in certain circumstances. There may be circumstances 
     in which communication of nonpublic information regarding 
     legislative activity to a third party falls ``within the 
     `sphere of legitimate legislative activity,''' and thus may 
     be protected by the privilege.


                               Conclusion

       The SEC's continued focus on insider trading and innovative 
     investigative techniques demonstrates our commitment to 
     pursuing potentially suspicious trading in a variety of 
     contexts. While recent innovations in the Division of 
     Enforcement are enhancing our ability to obtain that 
     evidence, to establish liability we must satisfy each of the 
     elements of an insider trading violation, including the 
     materiality of the information, the nonpublic nature of the 
     information, the presence of scienter, and a fiduciary or 
     other duty of trust and confidence that was violated by the 
     trading or tipping. While trading by Members of Congress or 
     their staff is not exempt from the federal securities laws, 
     including the insider trading prohibitions, there are 
     distinct legal and factual issues that may arise in any 
     investigations or prosecutions of such cases. Any statutory 
     changes in this area should be carefully calibrated to ensure 
     that they do not narrow current law and thereby make it more 
     difficult to bring future insider trading actions against 
     individuals outside of Congress.

  Ms. COLLINS. I now yield the floor to the sponsor of the bill, 
Senator Brown.
  The ACTING PRESIDENT pro tempore. The Senator from Massachusetts.
  Mr. BROWN of Massachusetts. Mr. President, I wish to thank Ranking 
Member Collins and Chairman Lieberman for doing something very unusual 
around here, which is to get something out in a very short period of 
time, having it not only come up and being filed by Senator 
Gillibrand--her bill and even my bill--and then you both working 
together to move it forward for a hearing. That hearing going very well 
and coming out so quickly is unheard of, and I wish to thank you for 
that.
  I also wish to thank Leader Reid for bringing this bill to the floor 
today as well as, as I said, Chairman Lieberman, Ranking Member 
Collins, and Senator Gillibrand. We have worked together to draft a 
bipartisan version of the STOCK Act, an act that passed out of 
committee by an overwhelming margin. That is appropriate because this 
isn't a partisan or ideological issue. It is about cleaning up 
Washington.
  Abraham Lincoln spoke at Gettysburg of fighting to preserve 
``government of the people, by the people, and for the people.'' I 
think that if the approval ratings are any indication, the American 
people have lost faith that we are living up to Lincoln's ideal, and we 
need to do it better. They have lost faith that Congress works for 
them. They believe too many Members of Congress have come to Washington 
to make themselves rich or to do other things instead of taking care of 
the people's business and that Congress only steps in to bail out the 
people with the most money or the most lobbying power, and that is not 
right.
  With the bill before us today, we can take a small step to 
reestablishing the trust between the American people and Congress. If 
we can pass the STOCK Act this week, it will send a very strong and 
unified message to the American people that Congress does not consider 
itself to be above the law. We can start to finally address that 
deficit of trust that the President referenced in his State of the 
Union Address. Members of Congress must live by the same rules that 
govern every other American citizen.
  As you may recall from a ``60 Minutes'' investigation only 2 months 
ago, we learned that Members of Congress, their staff, as well as other 
Federal employees, may be using material nonpublic information for 
their personal gain, either through stock trades, real estate deals or 
other financial activity. Everyone agrees this should be illegal or it 
already is, as referenced by the ranking member and her very thorough 
explanation of the law and the problems with it. But somehow, despite 
all the evidence, there has never been a single Member of Congress or 
congressional staffer charged with insider trading.
  I have to admit, similar to you and many others, I was shocked by 
this report. I think we all were. As a result, I filed my version of 
the STOCK Act, which would prohibit Members and employees of Congress 
from using material nonpublic information for their personal benefit.
  When Homeland Security and Governmental Affairs Committee held a 
hearing on the state of insider trading law as it applies to Congress, 
one thing was very clear. Although, as Ranking Member Collins said, the 
SEC theoretically has the ability to prosecute Members, there has been 
no precedent for it, and the state of law at this point is very 
unsettled. To remove any and all doubt, we need to act, and we need to 
act now. In addition to clarifying that insider trading is indeed a 
criminal offense, we are increasing the transparency of Members' 
trading activity to make sure our investment decisions are out there 
for everyone to see as plain as day. As President Ronald Reagan liked 
to say: Trust but verify.
  In conclusion, I wish to say that Senator Coburn has a phrase that I 
think is very accurate in this context. He talks about all the earmarks 
and contracts and Washington spending that end up in the hands of those 
people he calls well-heeled and well-connected. In my opinion, no one 
is more well-connected, with more access to a wide range of privileged, 
nonpublic information, than Members of Congress, their friends, 
employees or family members.
  At a time when our economy is struggling and the average American 
family has to make hard economic choices, congressional Members and 
staff should not be lining their pockets on insider information. 
Serving our country is a privilege, one I cherish very much. I believe 
we must level the playing field and show the American people that the 
people in Congress do not consider themselves to be above the laws we 
expect everyone else across the country to obey.
  I believe it is time to listen to our constituents and remember that 
every seat in this room is the people's seat.
  I yield the floor.
  The PRESIDING OFFICER (Mr. Blumenthal). The Senator from New York.
  Mrs. GILLIBRAND. I thank my colleague from Massachusetts for his 
strong advocacy on such an important issue. I would like to recognize 
Chairman Lieberman and Ranking Member Collins for their leadership and 
advocacy and their work on getting this out of the committee so 
quickly.
  I urge my colleagues to vote yes on cloture tonight on this 
bipartisan bill to ensure clearly and unambiguously that all Members of 
Congress, their staffs, and Federal employees play by the exact same 
rules as all the American people. The American people deserve the right 
to know their lawmaker's only interest is what is best for the country, 
not their own financial interests. Members of Congress and their 
families and staff should not be able to gain personal profit from 
information to which they have access that everyday middle-class 
Americans do not. It is simply not right. Nobody should be above the 
rules. I introduced a bipartisan bill in the Senate with 28 of our 
colleagues from both sides of the aisle to close this loophole.

[[Page 411]]

  The STOCK Act legislation is very similar to the legislation 
introduced by my friends in the House of Representatives, Congresswoman 
Louise Slaughter and Congressman Tim Walz. I thank them for their 
longstanding advocacy and dedication to this important cause. I again 
thank Chairman Lieberman, Ranking Member Collins, and all the committee 
members for their work in acting swiftly to move this bipartisan, 
commonsense bill to the floor for a vote. I also thank Leader Reid for 
his leadership in moving this body forward to this important debate and 
an up-or-down vote that the American people deserve.
  Our bill, which has received the support of at least seven good-
government groups, covers two important principles:
  First, Members of Congress, their families, and their staff should be 
barred from buying or selling securities on the basis of knowledge 
gained through their congressional service or from using the knowledge 
to tip off anyone else. The SEC and the CFTC must be empowered to 
investigate these cases. To provide additional teeth, such acts should 
also be in violation of Congress's own rules, to make it clear that the 
activity is inappropriate.
  Second, Members should be required to disclose transactions within 30 
days, to make this information available online for their constituents 
to see, providing dramatically improved oversight and accountability 
from the current annual hard copy reporting.
  I am pleased that the final product that passed with bipartisan 
support out of the committee is a strong bill with teeth and includes 
measures such as ensuring that Members of Congress cannot tip off 
others with nonpublic information gained through their duties and 
ensuring that trading with this information would be a violation of 
Congress's own ethics rules.
  Some critics have said this bill is unnecessary and is already 
covered under current statutes. I have spoken with experts tasked in 
the past with investigations of this nature, and they strongly 
disagree. We must make it unambiguous that this kind of behavior is 
illegal.
  My home State newspaper, the Buffalo News, noted:

       . . . the STOCK Act would ensure that it is the people's 
     business being attended to.

  President Obama said in his State of the Union--send him the bill and 
he will sign it right away.
  We should not delay. It is time to act. I urge my colleagues to vote 
yes tonight for cloture so we can pass this bill without delay. Let's 
take this step to begin rebuilding the trust necessary in Congress.
  The PRESIDING OFFICER. The Senator from Montana.
  Mr. TESTER. Mr. President, today the Senate will be given the 
opportunity to ban insider trading by Members of Congress and their 
staff. Insider trading is illegal for everyone in America, and there is 
no doubt about that. But when it comes to the information that folks in 
Congress learn before the general public learns it, there are no clear-
cut rules, and that is unacceptable. Folks in Congress clearly have 
advanced knowledge of which bills and issues Congress will consider. 
They know how those bills will affect basic goods and services, and 
often the legislation we pass impacts how well a company does on the 
stock market.
  Good men and women work for Congress, and I have the deepest respect 
for my colleagues. I would say all come to the Senate with good 
intentions and carry out their daily responsibilities without thinking 
about using information they learn for personal financial gain. That is 
why banning insider trading should be an easy lift. The fact that 
Members of Congress and their staffs are allowed to buy and sell stocks 
based on privileged information is incredible to me.
  Congress has historically low approval ratings from the American 
people. They believe many in Congress do not represent them and have 
forgotten what it means to be a normal American. Most folks would 
assume Congressmen and Senators already cannot trade stocks based on 
information they get in their jobs, but it turns out this may not be 
true. That is just one more example of why the American people have 
lost faith in this institution.
  As elected officials, it is our duty to regain the trust of the 
American people. We have an obligation to be as transparent and as 
accountable as possible. That is why I was the first Member of Congress 
to post my public schedule online for everybody to see. My constituents 
can look at my schedule every day to see with whom I meet and which 
hearings I attend.
  Now we have the opportunity to help regain trust in this body by 
bringing our own rules in line with the rest of America. By adding 
transparency and accountability, the American people will know we are 
working on their behalf without considering personal financial gains.
  This bill contains a provision Senator Begich and I sponsored to 
ensure that the annual financial disclosure forms filed by Members of 
Congress are available electronically. As with most transparency, full 
transparency means the public has the right and the ability to see our 
records. In the 21st century, there is no reason we can't do it right 
away. Letting those disclosures sit in a filing cabinet somewhere in 
the Capitol Complex is not transparency; putting the files online in a 
searchable format is.
  At a time of hyperpartisanship, this is an opportunity for both sides 
to work together on a bill we sorely need. There is not a Democratic or 
Republican angle to this. Every elected official should want to make 
sure the rules we are held to are consistent and transparent and in 
line with the rest of the Nation. In fact, this is as nonpartisan a 
bill as can be, with ideas from Senator Gillibrand and Senator Scott 
Brown but carried by Senator Lieberman. This bill covers each section 
of the political spectrum. It is a straightforward bill that is long 
overdue. The STOCK Act will be a step toward ensuring that when people 
run for Congress or come to work for Congress, they are doing so 
because they want to work on behalf of the American people and not for 
their own personal benefit.
  I call on my colleagues on both sides of the aisle to vote yes on 
this act so we can restore faith in Congress.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Massachusetts.
  Mr. BROWN of Massachusetts. Mr. President, I failed to reference--I 
was hopeful I could have Nathaniel Hoopes participate in the 
legislative process and participate on the floor in this debate.
  The PRESIDING OFFICER. The Senator from Connecticut.
  Mr. LIEBERMAN. I was going to reserve the right to object to Mr. 
Brown's motion on behalf of Mr. Hoopes because I was about to say the 
above-mentioned Mr. Hoopes got his start in my office and I was looking 
for an opportunity to say that.
  We have about 20 minutes until the vote on the motion occurs. 
Obviously, we are all here together--Senator Collins, Senator Brown, 
Senator Gillibrand, Senator Tester, and I--to urge Members to vote for 
cloture, to take up this measure. It would be a ray of light--warm 
light--if we pass this measure, this cloture vote, overwhelmingly. Then 
we could go on to debate it.
  Some people may have amendments--obviously, I presume they will--they 
want to offer. I hope that in considering amendments, our colleagues 
will focus on the problem that stimulated this legislation, that led 
Senator Brown and Senator Gillibrand to introduce it and led our 
committee to pass it out on a bipartisan vote, which was the concern 
that Members of the Congress and our staffs are not covered by insider 
trading laws. This legislation makes clear that we are covered by 
insider trading laws and therefore can be investigated and prosecuted 
for violation of those laws, both by the SEC and the Justice 
Department, but we have also asked the ethics committees of both Houses 
of Congress to issue interpretive guidance, making clear that insider 
trading is also a violation of the ethics rules of both Chambers.
  I am sure there are a lot of different aspects that Members of 
Congress, including ourselves on our committee

[[Page 412]]

who worked on this bill, might have in mind to also correct problems 
that exist, perhaps to also try to help rebuild public confidence in 
the institution of Congress, but I really appeal to our colleagues not 
to do so in a way that will make it more difficult or at worst 
impossible to fix the wrong, the problem that motivated this 
legislation, which is fear that Members of Congress and our staffs are 
not covered by insider trading laws.
  I have talked to Senator Collins about this. Members have other 
ideas. Please introduce them as legislation. To the extent they are 
forwarded to our committee, we will give them hearings and due 
consideration and try to approach them thoughtfully and then follow the 
will of the majority of members of our committee. In other words, let's 
try to not make this measure so sweet or so good that it cannot pass.
  I say to my colleagues, I just had a very unusual metaphor come to 
mind. I go to Dr. Seuss, one my favorite Dr. Seuss books I have not 
read in a while, ``Thidwick the Big-Hearted Moose.'' I don't know if 
you remember Thidwick, but he was a very good-natured moose. One by one 
through the pages of the book as Dr. Seuss records it, other animals in 
the forest want to lodge in his enormous antlers. He welcomes them 
until finally there is too much there and his antlers fall off and they 
all fall to the ground. We don't want this wonderful bill, which really 
does accomplish some very important things, to be so loaded that it 
falls to the wayside like Thidwick's antlers and does not pass.
  I urge my colleagues to join us in a spirited debate, but let's 
exercise the kind of restraint, on a bipartisan basis, that will allow 
us to have a significant, bipartisan, good-government accomplishment 
here at the beginning of this session of Congress.
  I listened to a conversation a while ago where somebody was asked, 
why is the public opinion of Congress so bad? And the answer was that 
it is because Congress has been so bad. This has not been a time in the 
history of this great institution that I think any of us feel good 
about. This is an opportunity to do something real that we can not only 
feel good about but, more important, that our constituents can feel 
good about.
  I hope we will have a resounding vote at 5:30.
  I yield to the Senator from Massachusetts.
  The PRESIDING OFFICER. The Senator from Massachusetts.
  Mr. BROWN of Massachusetts. Mr. President, I concur, and I have 
always felt one good deed begets another good deed, and so on and so 
forth. This is a measure the American people are clamoring for. We need 
to reestablish the trust with the American people, and this is the 
first step in doing that very thing.
  Once again, I thank the chairman for referencing something I failed 
to reference as well. I would encourage my colleagues on my side of the 
aisle and my friends on the other side of the aisle to keep all 
amendments germane. We need to make sure we move for cloture, get 
cloture, and then have a free, fair, and spirited debate on the issues 
that concern them but don't get sidetracked to the point where the bill 
gets killed or pulled. I think that would be a travesty and a mistake. 
So I am going to encourage my colleagues to make sure if they have a 
concern, let's air it out and take a full and fair vote on it and move 
forward.
  I love hearing the Senator's stories. I am reading his book because 
of his knowledge and history and the way he can weave things back and 
forth. That is a very good analogy.
  I too have concerns. We have referenced many times that there may be 
forces beyond us who want to make sure this doesn't come out of this 
Chamber and go next door and then ultimately be signed by the 
President. I am not one of them. I want to make sure--as the Senator 
from Connecticut, the Senator from Maine, and many of the other Members 
and the cosponsors--that this bill comes out in a good and fair form.
  We are here for a very specific reason, to address a very specific 
issue that affects people, quite frankly, in a manner that I never 
thought was possible. If there are other concerns, I commend the 
chairman for publicly stating to bring them up in a separate matter on 
a separate bill and address them if there are issues we have missed. I 
have a fear--and I hope I am wrong--that by making it, as the Senator 
from Connecticut referenced, too perfect or too sweet, it could fail, 
and I don't want to see that. I want to make sure we have a laser-sharp 
bill that addresses a very specific issue, and if we do it together and 
work in a true bipartisan manner, we have an opportunity right now in 
this moment in our history of this country to do something special.
  I was sent here to do the people's business, and I do it each and 
every day by working across party lines with good people and good 
Democrats like the Senator from Connecticut and others. I take that 
role very seriously. We have an opportunity right now to send a very 
powerful message for which the American people are yearning. They want 
us to do well. They want us to be good. They want us to be better than 
we have been representing ourselves right now.
  So I am encouraging--just to reference and take it a step further--my 
colleagues to do the same thing. Let's put our party differences aside. 
Let's put the inner party differences aside and push this legislation 
through in a thoughtful, methodical, respectful, and responsible manner 
that will make the American people say: OK, it is a good first step. 
What is next, Congress? Are we going to do the postal bill and try to 
save the postal bill? I hope that is the next issue. We need to work in 
a truly bipartisan manner.
  Once again, who is here? It is me, Senator Lieberman, Senator 
Collins, and Senator Cochran who are pushing to try to save the post 
office. That should be the next issue. What is after that? We need to 
address our fiscal and financial issues so we can come out of this 3-
year recession in a lean-and-mean manner so we can be a better country 
and be able to compete on a global basis. We need to start putting the 
American people's interests first instead of everybody else's.
  I usually get in trouble when I go off like this, but I think it is 
critically important to let the people know that one good deed begets 
another good deed, and this is the first step in this new calendar year 
to do just that.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Connecticut.
  Mr. LIEBERMAN. I appreciate the comments.
  Mr. President, I am pleased to report that I just received notice 
that within the hour the administration put out the Statement of 
Administration Policy--the so-called SAP--strongly endorsing this 
legislation, S. 2038, and we appreciate that very much. It is a very 
strong statement of support for the principles and exactly the kinds of 
things Senator Collins, Senator Brown, Senator Gillibrand, Senator 
Tester, and I have been saying.
  As the President said in his State of the Union speech, if we can get 
this bill to his desk--and the sooner the better--he will sign it as 
soon as he possibly can.
  If there is no one else who wishes to speak at this time, I would 
suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. LIEBERMAN. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                             Cloture Motion

  Under the previous order and pursuant to rule XXII, the Chair lays 
before the Senate the pending cloture motion, which the clerk will 
report.
  The assistant legislative clerk read as follows:

                             Cloture Motion

       We, the undersigned Senators, in accordance with the 
     provisions of rule XXII of the Standing Rules of the Senate, 
     hereby move to bring to a close the debate on the motion to 
     proceed to Calendar No. 301, S. 2038, the Stop Trading on 
     Congressional Knowledge Act:

[[Page 413]]

         Harry Reid, Joseph I. Lieberman, Sherrod Brown, Joe 
           Manchin III, Tom Udall, Mark Begich, Herb Kohl, Bill 
           Nelson, Frank R. Lautenberg, Jeanne Shaheen, Richard 
           Blumenthal, Benjamin L. Cardin, Christopher A. Coons, 
           Dianne Feinstein, Patrick J. Leahy, Richard J. Durbin, 
           Patty Murray, and Charles E. Schumer.

  The PRESIDING OFFICER. By unanimous consent, the mandatory quorum 
call has been waived.
  The question is, Is it the sense of the Senate that the debate on the 
motion to proceed to S. 2038, a bill to prohibit Members of Congress 
and employees of Congress from using nonpublic information derived from 
their official positions for personal benefit, and for other purposes, 
be brought to a close?
  The yeas and nays are mandatory under the rule.
  The clerk will call the roll.
  The assistant legislative clerk called the roll.
  Mr. DURBIN. I announce that the Senator from Louisiana (Ms. Landrieu) 
and the Senator from New Jersey (Mr. Menendez) are necessarily absent.
  Mr. KYL. The following Senators are necessarily absent: the Senator 
from Georgia (Mr. Isakson), the Senator from Illinois (Mr. Kirk), and 
the Senator from Mississippi (Mr. Wicker).
  The yeas and nays resulted--yeas 93, nays 2, as follows:

                       [Rollcall Vote No. 3 Leg.]

                                YEAS--93

     Akaka
     Alexander
     Ayotte
     Barrasso
     Baucus
     Begich
     Bennet
     Bingaman
     Blumenthal
     Blunt
     Boozman
     Boxer
     Brown (MA)
     Brown (OH)
     Cantwell
     Cardin
     Carper
     Casey
     Chambliss
     Coats
     Cochran
     Collins
     Conrad
     Coons
     Corker
     Cornyn
     Crapo
     DeMint
     Durbin
     Enzi
     Feinstein
     Franken
     Gillibrand
     Graham
     Grassley
     Hagan
     Harkin
     Hatch
     Heller
     Hoeven
     Hutchison
     Inhofe
     Inouye
     Johanns
     Johnson (SD)
     Johnson (WI)
     Kerry
     Klobuchar
     Kohl
     Kyl
     Lautenberg
     Leahy
     Lee
     Levin
     Lieberman
     Lugar
     Manchin
     McCain
     McCaskill
     McConnell
     Merkley
     Mikulski
     Moran
     Murkowski
     Murray
     Nelson (NE)
     Nelson (FL)
     Paul
     Portman
     Pryor
     Reed
     Reid
     Risch
     Roberts
     Rockefeller
     Rubio
     Sanders
     Schumer
     Sessions
     Shaheen
     Shelby
     Snowe
     Stabenow
     Tester
     Thune
     Toomey
     Udall (CO)
     Udall (NM)
     Vitter
     Warner
     Webb
     Whitehouse
     Wyden

                                NAYS--2

     Burr
     Coburn
       

                             NOT VOTING--5

     Isakson
     Kirk
     Landrieu
     Menendez
     Wicker
  The PRESIDING OFFICER. On this vote, the yeas are 93, the nays are 2. 
Three-fifths of the Senators duly chosen and sworn having voted in the 
affirmative, the motion is agreed to.
  The Senator from Connecticut.

                          ____________________