DEFINITION of 'Stop Trading On Congressional Knowledge Act - STOCK Act'
A bipartisan bill signed into law Apr. 4, 2012 by President Barack Obama that prevents members of congress from trading stocks based on nonpublic information gathered on Capitol Hill. The Stop Trading on Congressional Knowledge (STOCK) Act elucidates that congressional members and staff owe a duty to United States citizens not to misappropriate nonpublic information to make a profit. In addition to banning insider trading for members and Congressional staff, the STOCK Act provides for increases transparency in financial disclosure reporting, and requires members of Congress and government employees to report certain investment transactions within 45 days.
BREAKING DOWN 'Stop Trading On Congressional Knowledge Act - STOCK Act'
The STOCK Act amended the Ethics in Government Act of 1978 to require electronic reporting and online availability of public financial disclosure information. This information must be made available on agency web sites and through databases that can be searched and sorted.
According to the Act, a member of Congress who commits one of several corruption offenses while serving as an elected official will be required to forfeit his or her federal pension. The STOCK Act expands forfeiture to apply to misconduct by members committed in other federal, state and local elected offices and adds insider trading as a crime for which forfeiture will be required.
The STOCK Act also requires disclosure of personal mortgage terms, bans special access to initial public offerings and bans bonuses for Fannie Mae and Freddie Mac senior executives.