Congress’ New Insider Trading Law

The President recently signed into law the Stop Trading on Congressional Knowledge Act of 2012, which specifies that members of Congress, congressional employees, and other federal employees are not exempt from insider trading laws. It also requires electronic filing and public availability of financial disclosure reports, requires prompt reporting of certain financial transactions, and broadens the list of crimes that would result in a member losing his or her pension.

The act was passed after media reports of Congress members and staff using inside information for personal gain. But, as noted in a Congressional Research Service report, members never enjoyed an exemption from insider trading laws, but the act makes this explicit.