When Public Citizen asked for an investigation in January of possible insider trading by Rep. Chris Collins, R-N.Y., and then-Rep. Tom Price, R-Ga., it raised the question of whether the Stop Trading on Congressional Knowledge Act has had any impact on members’ stock-trading activity at all.
When the Stock Act was finally approved in 2012 by a reluctant Congress, it was a widely hailed legislative achievement. The legislation applied the law against insider trading for the first time to Congress itself and mandated an online disclosure system of members’ stock trades so that compliance to the law could be monitored.
I fully expected that the disclosure system would also reduce stock-trading activity by Congress, especially in industries that members directly oversee, because the conflict of interest would now fall under public scrutiny. “I don’t know how much active trading has gone on since the Stock Act. I suspect it’s dampened it,” I told the Hill newspaper in 2014. “Members are going to be more cautious now.”
Have recent events proved me wrong?I looked at stock-trading activity of all U.S. senators before and after passage of the Stock Act to answer that question. The results provide good news and bad news, showing that the law has worked but can still be bolstered.
The Stock Act has indeed had a dramatic impact on stock-trading activity by senators, reducing both the overall volume of stock trades and the transaction value of those trades. Remarkably, the number of stock transactions three years before and after passage of the Stock Act has fallen by 68 percent. Furthermore, the monetary value of those stock trades has also fallen by 66 percent—an extraordinary achievement.
It is reasonable to assume the same trend has occurred in the House of Representatives. But subsequent legislation by Congress eliminated the “searchable, sortable and downloadable” disclosure requirement of stock-trading activity, which makes it much harder to compile a comparable database for the House.
But there is bad news as well. Of the senators who remain active in the stock market, they have a high propensity for trading stocks in businesses they directly oversee from their committees. From these perches, members of Congress often are privy to information that could directly affect the value of stocks, posing a serious conflict of interest when trading in those markets. Sen. Sheldon Whitehouse, D-R.I., one of the Senate’s more prolific players in the stock market, sits on the Senate Subcommittee on Primary Health and Retirement Security as well as the Subcommittee on Privacy, Technology and the Law, all the while trading stocks in the health-care and technology industries. Sen. Bob Corker, R-Tenn., joins Whitehouse in trading stocks in infrastructure businesses he directly oversees from his position on the Senate Banking, Housing and Urban Affairs Committee. The list goes on of senators playing in the stock markets of industries directly related to their official oversight roles in Congress.
Politico found a similarly disturbing trend in both chambers of Congress. Politico identified about 30 percent of members of the House and Senate who are currently active in the stock market. Several of these members play in the markets over which they have some direct legislative responsibility — in some cases, even sponsoring legislation that could have a direct bearing on their stock investments.
Just as problematic, many congressional senior staffers — who have been removed from public scrutiny of their stock-trading activities when Congress eliminated the comprehensive disclosure requirement of the Stock Act — are also trading stocks in industries their bosses directly oversee. Last year, three members of the Senate Judiciary Committee asked the Justice Department whether the drug company Mylan was violating federal drug laws. Nine days later, the Justice Department agreed and levied a massive settlement penalty against the company. After the letter and before the settlement, a senior staffer to the Judiciary Committee dumped between $4,004 and $60,000 of Mylan stock investments.
Such conflicts of interest in stock trading activity are squarely addressed in the executive branch. Senior executive branch officials are required to divest themselves of any stocks and other properties that pose a direct conflict of interest with their official duties. The same ethics standard should apply to Congress — both to members and senior staff. A member of the Senate Armed Services Committee, for example, should not be actively buying or selling stocks in the defense industry.
In order to ensure compliance with the Stock Act, it is imperative that Congress reestablish its searchable, sortable and downloadable disclosure system for stock trades by members and senior staff. No doubt the limited disclosure system still in place has contributed to the decline in congressional stock-trading activity. But the ongoing conflicts of interest in the stock market by some members of Congress and their staff call for a much more robust online disclosure system.
Furthermore, the “political intelligence” industry — the secretive Wall Street operatives and lobbyists who roam the halls of Congress in search of valuable information to sell on the stock market — must be brought out of the shadows. The Political Intelligence Transparency Act, reintroduced by Reps. Louise Slaughter, D-N.Y., and John Duncan, R-Tenn., would mandate that these operatives register under the Lobby Disclosure Act and disclose their clients and activities on a regular basis.
While the Stock Act has clearly been a phenomenal achievement in reducing troubling stock-trading activity by members of Congress, more remains to be done. It is time to revisit and strengthen the law.
This appeared in the Lewiston Tribune:
If you want to know what a smear looks like, ask former Idaho Supreme Court Justice Cathy Silak.
Her 2000 re-election campaign was scorched by a last-minute advertisement linking her to every left-of-center stance you could imagine. This was one of the reasons Dan Eismann was elected in her place.
Need another example?
Consult former state Rep. Lenore Hardy Barrett, R-Challis.
Good luck finding a more resolute opponent to all things environmentalist, most notably the Endangered Species Act.
That didn’t stop Barrett’s opponents from portraying her as soft on wolf reintroduction. And in 2014, the voters ended her 11-term career.
Smear campaigns are a time-honored tradition in American politics. But to be smeared, you have to be struck with a misleading if not outright false allegation so late in the campaign that you are virtually powerless to clear your name.
Smearing is not what happened last week to Rep. Bryan Zollinger, R-Idaho Falls.
Far from it.
Just as Zollinger lost his bid to be appointed as state Sen. Bart Davis’ successor, the Spokesman-Review’s Betsy Russell was tipped off about the House member’s extensive criminal record.
While Zollinger was in his late teens and early 20s — between 1994 and 1999 — he was convicted of grand theft, a felony, and five misdemeanors including drunken driving, malicious injury to property (which started out as felony arson), another malicious injury to property charge and other alcohol-related charges. Prosecutors dropped four other misdemeanors brought against him.
Now 41, the Idaho Falls attorney said he was “thankful to live in America, the land of redemption,” and acknowledged the background.
“I figured one day it’d come up,” he told Russell. “Everyone probably makes mistakes when they’re young and dumb, and I was definitely young and dumb.”
That hasn’t stopped Idaho Freedom Foundation President Wayne Hoffman from complaining about a “cowardly smear campaign” being waged against Zollinger — who just happens to score 98 percent on the IFF voting scorecard.
“For months, we’ve known that center-left Republicans and their political operatives have been trolling court and property records looking for dirt on conservative Idaho lawmakers,” Hoffman wrote.
You can call it opposition research. You can even question the motives behind it. But documenting a criminal background — especially when Zollinger confirmed it and he’s been given more than six months to explain himself before he faces voters in the May 15 GOP primary — is hardly a smear.
It’s no different from the situation Rep. Brandon Hixon, R-Caldwell, encountered five years ago when a records check turned up a decade-old rap sheet that included five misdemeanors — including urinating in public and drinking under age — by the time he was 21.
“I own all this and have made some poor decisions in the past, but I am ready to move forward,” Hixon told the Idaho Press-Tribune of Nampa.
None of which has prevented Hixon from being elected and re-elected.
Hoffman was equally distressed when Russell broke another revelation about state Rep. Priscilla Giddings, R-White Bird, who scored 96 percent on the IFF voting index. It turned out Giddings carried two homeowner’s exemptions at the same time—one in Garden City and another in White Bird.
Aside from whether Giddings was entitled to take two tax breaks while virtually everyone else is limited to one, the situation raised questions about whether she had been a legal resident of Idaho County long enough to run for the Legislature last year.
Like it or not, it’s a matter of public record in two county courthouses.
Nor was former Lewiston City Council candidate Greg Follett smeared when it was pointed out he avoided prosecution by snitching on the man who sold him $300 worth of cocaine last year. It’s right there in a police report and the court case file involving drug dealer Henry Gallegos Jr., who is facing sentencing on Oct. 25.
The same goes for Clarkston City Council candidate Richard Hayward, who according to a 1995 New York Times article was tied to KKK leader David Duke. Since then, Hayward has made amends, but it’s part of his background.
Voters are free to consider or disregard any of this. First, however, they have to be informed.
The only question is whether the candidate freely discloses the unpleasant details of his background — or waits for someone else to find out.
That’s the price of entering the public arena. Would you want it any other way?