Stop Trading On Congressional Knowledge Act - STOCK Act

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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.

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RELATED FAQS
  1. What exactly is insider trading?

    An "insider" is any person who possesses at least one of the following: 1) access to valuable non-public information about ... Read Full Answer >>
  2. What is the difference between wash trading and insider trading?

    Wash trading is an illegal trading activity that artificially pumps up trading volume in a stock without the stock ever changing ... Read Full Answer >>
  3. How can I profit from monitoring open interest?

    Since markets experience asymmetric information between parties, monitor whether there is an imbalance between the open interest ... Read Full Answer >>
  4. If I write a blog post about stocks I own, is that considered insider trading?

    Writing a blog post about stocks you own is not considered insider trading. The only duty of the blogger is to disclose he ... Read Full Answer >>
  5. Why is moral hazard so prevalent in the financial services industry?

    Moral hazard tends to be prevalent in the financial services industry due to the nature of the industry, temptation and greed, ... Read Full Answer >>
  6. Can you accidentally engage in insider trading?

    In 2011, an article appeared in the New York Daily News titled "Insider trading is not always high-profile or intentional; ... Read Full Answer >>

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