WASHINGTON—Senator Scott Brown of Massachusetts is urging his Republican colleagues in the House to quickly close a loophole in a new insider trading law requiring most federal employees, including members of Congress and their staffs, to publicly disclose investment transactions.
While federal employees must adhere to the new reporting rules meant to ban insider trading, their spouses and children are apparently under no such requirements because of the loophole.
With Brown among those at this side, President Obama signed the measure into law in April. The law, known officially as the Stop Trading on Congressional Knowledge Act, requires government employees to report investment transactions with 45 days. The law requires those reports to be disclosed on government websites.
The loophole was first reported this week by CNN, which traced it to revisions made by the offices of House Majority Leader Eric Cantor, a Republican from Virginia.
Cantor’s office acknowledged to CNN that his office “inadvertently” edited the legislation so that spouses and children were exempt from the law’s requirements. While the Senate has interpreted the new law to include spouses and children, the House Ethics Committee issued guidelines that hew to the letter, not the spirit of the law. The executive branch’s Office of Government Ethics sided with the House interpretation.
Brown, who has taken credit for the winning passage of the legislation, shared his dismay in letters sent yesterday to House Speaker John Boehner and Cantor, as well as a separate letter to President Obama.
“I believe the House Ethics Committee and OGE reached their interpretation based on an unnecessarily narrow reading of the STOCK Act,” Brown wrote in both letters.
“It is deeply troubling that the House of Representatives and executive branch would attempt to operate under a substantially weaker interpretation of the STOCK Act than the Senate. I ask that you reconsider the interpretation that has caused a loophole in the STOCK Act and close it immediately.”
Cantor’s office said it would remedy the matter, but has yet to say how it would do so.
“Since new information has been brought to our attention with respect to this discrepancy, we are reviewing our options regarding transaction reports in the House of Representatives,” a Cantor spokesman, Doug Heye, said in an email.
Brown often points to the legislation as a crowning achievement as he campaigns for re-election and portrays himself as a good-government watchdog.
He is facing a strong challenge from Democrat Elizabeth Warren, a Harvard professor, who bills herself as a consumer advocate.