[Congressional Record (Bound Edition), Volume 158 (2012), Part 4]
[Extensions of Remarks]
[Pages 5001-5002]
[From the U.S. Government Publishing Office, www.gpo.gov]




          STOP TRADING ON CONGRESSIONAL KNOWLEDGE (STOCK) ACT

                                 ______
                                 

                          HON. TIMOTHY J. WALZ

                              of minnesota

                    in the house of representatives

                        Tuesday, April 17, 2012

  Mr. WALZ. Mr. Speaker, I rise today on behalf of myself and 
Representative Louise M. Slaughter to note the end of a successful 
journey in good government reform. Six years ago, the Stop Trading on 
Congressional Knowledge (STOCK) Act was introduced for the first time 
in the House of Representatives. We reintroduced this bill for the 
fourth time on March 17, 2011 and a little over a year later, we are 
proud to see the language we introduced to ban insider trading, signed 
into law.
  Since the President signed the bill (S. 2038, 112th Congress; P.L. 
112-105) on April 4th, 2012, we would like to submit for the record our 
intent in regards to banning Congressional insider trading with the 
STOCK Act. This overwhelming bipartisan legislation is a significant 
accomplishment for Congress, and we would like to have the record state 
our original intent.
  Though Members of Congress and their staffs, executive branch 
employees, and federal judges and other federal judicial employees were 
not exempt from the insider trading prohibitions at the time, we deemed 
it important to affirm explicitly that no such exemption

[[Page 5002]]

existed and that these individuals do in fact owe a duty of trust and 
confidence to the U.S. government and the American people. [See, e.g., 
Statement of Robert Khuzami, SEC Director of Enforcement, to Committee 
on Homeland Security and Governmental Affairs (Dec. 1, 2011); SEC v. 
Cheng Yi Liang, et al., Exchange Act Rel. No. 21097 (March 29, 2011 
(bringing insider trading charges against a FDA 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); United 
States v. Royer, 549 F.3d 886 (2d. Cir. 2008) (affirming a conviction 
of an FBI agent for tipping information about ongoing investigations 
and information on law enforcement databases); SEC v. John Acree, 
Litigation Rel. No. 14231, 57 SEC Docket 1579 (Sept. 13, 1994) 
(announcing a settled action with a former employee of the Office of 
the Comptroller of the Currency for trading on the basis of material 
non-public information concerning banks); United States v. Rough, Crim. 
No. 88-425 (D.N.J. 1988) (indictment of former New York Federal Reserve 
Bank member for revealing highly sensitive nonpublic information 
regarding changes in the Fed's discount rate); SEC v. Saunders, 
Litigation Rel. No. 9744, 26 SEC Docket 75 (September 2, 1982) 
(announcing settled action with the former Director for Communications 
for a division of the Naval Electronics Systems Command for purchasing 
securities while in possession of material nonpublic information 
concerning a contract award); Code of Conduct for United States Judges, 
Canon 4(D)(5) (stating ``A judge should not disclose or use nonpublic 
information acquired in a judicial capacity for any purpose unrelated 
to the judge's official duties''); Code of Conduct for Judicial 
Employees, Canon 3(D) (stating ``A judicial employee should never 
disclose any confidential information received in the course of 
official duties except as required in the performance of such duties, 
nor should a judicial employee employ such information for personal 
gain.'').]
  In affirming that the insider trading prohibitions applied to these 
individuals in the same way they apply to everyone else, we made it 
perfectly clear that nothing in the Act--not the affirmation of the 
duties, nor the instructions to issue interpretive guidance, nor the 
interpretive guidance that may be issued as a result--can be construed 
to limit or impair the construction of the antifraud provisions of the 
securities laws or the authority of the SEC under those provisions. We 
included an unambiguous rule of construction applicable to the entire 
Act, as well as unambiguous savings clauses in the amendments being 
made to the Exchange Act, that make that clear.
  Thus, when the Act instructs the Ethics Committee, Office of 
Government Ethics or Judicial Conference of the U.S. to issue 
interpretive guidance to clarify that government officials cannot use 
nonpublic information as a means for making a ``private profit'', this 
is not intended to--and in fact does not--limit or more narrowly define 
any insider trading requirements that currently exist in the law, nor 
limit or more narrowly define any ethical prohibitions that may 
currently exist. Similarly, when the Act says that nothing in the Act 
shall be in derogation of the obligations, duties or functions of 
Members or employees of Congress, this is not intended to permit 
Members or staff to use this provision as a shield to forestall 
liability for insider trading.

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