What is a 'Stop Trading On Congressional Knowledge Act - STOCK Act'

The Stop Trading On Congressional Knowledge Act, or STOCK Act, was a bipartisan bill signed into law Apr. 4, 2012 by President Barack Obama preventing members of congress from trading stocks based on nonpublic information.

BREAKING DOWN 'Stop Trading On Congressional Knowledge Act - STOCK Act'

The Stop Trading on Congressional Knowledge (STOCK) Act stated that congressional members and staff were prohibited from using nonpublic information obtained due to their positions in government to turn a profit.

Additionally, the STOCK Act demanded members of Congress and other high-ranking government officials increase their transparency by using financial disclosures. This increased transparency includes required reporting of certain financial gains within 45 days of receipt and disclosure of home mortgage terms. It also forbids access to Initial Public Offerings (IPO’s) and bans bonuses for senior executive members of the boards of Fannie Mae and Freddie Mac.

The STOCK Act was an amendment to the Ethics in Government Act of 1978 which allowed for electronic reporting and an online publication of public financial disclosure information. The financials must be accessible through agency websites and data bases, and contain features for searching and sorting.  Failing to adhere to the rules of the act could result in the forfeiture of congressional pensions.

Government Employees and Ethics Oversight

In July 2018, the United States commerce Secretary Wilbur Ross found himself in trouble for failing to divest himself from investments that were potentially in violation of criminal conflict of interest laws. Although the secretary stated that the failure was an error, and not done with the intention of committing misconduct, watchdog groups were quick to point out that this oversight was suspicious.

Secretary Ross has stated repeatedly since the discovery of the oversight that he will divest immediately. An internal Commerce Department investigation declared that there was no indication of willful wrongdoing. Mr. Ross does not currently face charges or have any intention of stepping down from his position.

Despite these facts, many have spoken out against Mr. Ross and called for an additional investigation, stating that these stocks have compromised not only his ability to act in America’s best interests, but may have also broken the law. Senator Ron Wyden of Oregon is calling for an additional Justice Department investigation.

Mr. Ross isn’t the only member of the Trump administration who has been in the news over assets and allegations of ethics violations. Most recently Scott Pruitt, the former chief of the Environmental Protection Agency (EPA) resigned after questions about his improper allocation of funds had arisen. Also, Tom Price, the former Secretary of Health and Human Services (HHS) resigned after questions arose about excessive travel expenses.

  1. Jobs And Growth Tax Relief Reconciliation ...

    An act passed by congress that was intended to improve the economy ...
  2. Disclosure

    Disclosure is the act of releasing all relevant company information ...
  3. Section 232 of the Trade Expansion ...

    Section 232 of the Trade Expansion Act of 1962, authorizes the ...
  4. Financial CHOICE Act

    The Financial CHOICE Act is a bill designed to roll back regulations ...
  5. Investment Advisers Act of 194 ...

    The Investment Advisers Act of 1940 is a U.S. federal law that ...
  6. Credit Card Accountability, Responsibility ...

    The Credit Card Accountability, Responsibility, and Disclosure ...
Related Articles
  1. Insights

    Wilbur Ross

    Wilbur Ross was named Secretary of Commerce by Donald Trump after winning the presidential election.
  2. Insights

    What Are the Duties of the Treasury Secretary?

    The Secretary of the Treasury is one of the most powerful positions in the U.S. federal government.
  3. Financial Advisor

    Asset Manager Ethics: Acting Professionally and Ethically

    To aid managers in understanding the requirements for ethical and professional behavior, we offer some basic guidelines.
  4. Trading

    Discount Retailer Ross Stores May Suffer Slump

    Ross Stores reports earnings with a market-neutral P/E ratio of 25.05 and a puny dividend yield of 0.82%.
  5. Retirement

    How Congress Retirement Pay Compares to the Overall Average

    There are more retirement plan options for a member of the United States Congress than for the average citizen.
  6. Trading

    Mexican Peso Higher as U.S. Commerce Sec Ross Calls for Stability

    U.S. Commerce Secretary Wilbur Ross does verbal intervention.
  7. Investing

    SPDR's Jim Ross on How to Utilize ETFs

    As Executive VP of State Street Global Advisors and Chairman of the Global SPDR business, Jim Ross knows how to make ETFs work for him.
  8. Insights

    A Short History of the US Federal Trade Commission

    Since the early 1900s, the Federal Trade Commission has preventing anticompetitive, deceptive, and unfair business practices.
  9. Personal Finance

    Why Fannie Mae And Freddie Mac Might Be In Trouble

    Fannie Mae and Freddie Mac are under increased scrutiny as debates continue about conservatorship, share price, and profit allocations.
  10. Insights

    Government Regulations: Do They Help Businesses?

    These rules are in place to protect consumers and help businesses thrive at the same time.
  1. What are key government regulations that affect investing in the banking sector?

    Discover how the global financial crisis of 2008 changed the face of banking in the United States and around the world by ... Read Answer >>
  2. What major laws regulating financial institutions were created in response to the ...

    Read about the major federal responses to the financial crisis of 2008, such as the Dodd-Frank Wall Street Reform Act and ... Read Answer >>
  3. What is impact of Sarbanes-Oxley Act?

    Here is a detailed rundown of the provisions of the Sarbanes-Oxley Act, including strict disclosures, criminal liability ... Read Answer >>
  4. Is a private company required to show financial information?

    Understand whether a private company is required to disclose financial information to the public. Learn what is required ... Read Answer >>
  5. What are the economic impacts of specialization?

    Read about the economic impacts of specialization and the division of labor, and see why individuals, firms and even countries ... Read Answer >>
Trading Center