U.S. President Barack Obama on Wednesday signed the Stop Trading on Congressional Knowledge (STOCK) Act into law, that would prevent congressmen and government staffs from insider stock trading based on nonpublic information they collected.
The bipartisan bill was first brought out by Obama in his State of the Union address in January, saying that the bill would help to limit the corrosive influence of money in politics and ensure that Congress was playing by the same set of rules as everyone else.
U.S. President Barack Obama (C), flanked by members of the Congress and U.S. Vice President Joe Biden, signs the STOCK Act into law at the Eisenhower Executive Office Building of the White House in Washington D.C., capital of the United States, April 4, 2012. The Stop Trading on Congressional Knowledge (STOCK) Act is a bipartisan bill that prevents Members of Congress from trading stocks based on nonpublic information they gleaned on Capitol Hill. (Xinhua/Zhang Jun)
Under the bill, members of Congress and government employees are required to report certain investment transactions within 45 days after a trade. The information in public financial disclosure reports is also required to be available on agency websites and ultimately through searchable, sortable databases.
In addition, congressmen and certain high level government officials have to disclose the terms of personal mortgages, while their participation in IPOs is also limited to purchases available to the public generally.
"While this is a good first step, the President will continue to work with Congress to do even more to help fight the destructive influence of money in politics and rebuild the trust between Washington and the American people," the White House said in a statement.
However, some critics pointed out the bill was symbolic in nature and aimed at restoring Washington's sagging image. It just works as an assurance that congressmen and government staffs are not exempt from the prohibitions of securities laws.