Scott Brown is horrified that his own bill might do exactly what his office said it did

First we had the fake bin Laden photos.  Then kings and queens.  Then President Obama and Secretary of State Clinton were calling him all the time.

And now this.  As you know, Scott Brown is very proud of the STOCK Act, a modest government reform law that restricts Members of Congress and executive branch employees from insider trading.  But CNN discovered that there’s a problem: the House has interpreted the law to exclude Congressfolks’ spouses and children.

Massachusetts Republican Scott Brown, the only Republican senator to attend the White House signing ceremony, said he was “obviously very concerned.”

“Say I find out some information, I tell my wife and she goes and trades on it, what’s the difference?” Brown told CNN.

Brown, who speaks constantly about this bill in his neck-and-neck race for re-election against consumer advocate Elizabeth Warren, said the whole point of passing the law was to demonstrate that members of Congress weren’t held to a different standard.

“I mean, bottom line, we’re supposed to have that level of transparency and have us be treated like every other member of the United States and bottom line, if we can’t do it, then — sorry, if they can’t do it — then we shouldn’t be able to do it as well.”

All well and good.  But the problem is this: back in November, when Senator Brown’s office was trying to round up co-sponsors for the bill, his legislative director, Nathaniel Hoopes, circulated a memo via email that explicitly said that his boss’s version of the bill did not apply to spouses.  The memo was obtained by BMG.

From: Hoopes, Nat (Scott Brown)
Sent: Thursday, November 17, 2011 11:24 AM
Subject: STOCK Act FAQs

LDs [Legislative Directors],

Please find below some answers to frequently asked questions about the STOCK Act (S. 1871), introduced earlier this week by Senator Brown. The bill has been endorsed by the Government Watchdog group Public Citizen, and the Homeland Security and Government Affairs Committee announced that they will hold a hearing on the bill. Please let me know if your boss would like to co-sponsor.

Q: Does the Senate STOCK Act cover the spouses of members?

A: No. Spouses of members are outside the scope of the Senate STOCK Act.

Nathaniel Hoopes

Legislative Director

Senator Scott P. Brown (R-MA)

Oops.  Maybe Scott should’ve checked the FAQs his staff sent out regarding his bill.  Or something.  The full text of the email from Hoopes is on the flip.

From: Hoopes, Nat (Scott Brown)
Sent: Thursday, November 17, 2011 11:24 AM
Subject: STOCK Act FAQs

LDs,

Please find below some answers to frequently asked questions about the STOCK Act (S. 1871), introduced earlier this week by Senator Brown. The bill has been endorsed by the Government Watchdog group Public Citizen, and the Homeland Security and Government Affairs Committee announced that they will hold a hearing on the bill. Please let me know if your boss would like to co-sponsor.

Q: How many co-sponsors are now on the STOCK Act (S. 1871)?

A: Senator Rubio was an original co-sponsor of the Stock Act and Senators Heller and Blunt are also co-sponsors.

Q. What does the STOCK Act do?

· The Act would prohibit Members and employees of Congress and Executive Branch employees from buying or selling stocks, bonds, or commodities futures based on nonpublic information they obtain because of their privileged status.

· The Act would prohibit Congressional Members and employees from disclosing any non-public information about any pending or prospective legislative action obtained from a member or employee of Congress for investment purposes.

· Congressional Members and employees would be required to report the purchase, sale or exchange of any stock, bond, or commodities future transaction in excess of $1,000 within 90 days.

· Political intelligence firms would be required to register with the House and Senate, much like lobbyists currently do.

Q: How does the Senate STOCK Act differ from the House version?

A: Although the Senate STOCK Act is almost identical to the House version, the Senate version would not change the House or Senate rules.

Q: Does it require that members place their investments in a Blind Trust or mutual fund?

A: No. Members can continue to trade actively across all asset classes, but in accordance with new rules.

Q: Why not simply amend the House and Senate rules to ban Congressional Members and employees from trading on nonpublic information?

A: Changing House rules in a Senate bill is unconstitutional. Article 1, Section 5, Clause 2 of the Constitution states that “[e]ach House may determine the Rules of its Proceedings, punish its Members for disorderly Behavior, and, with the Concurrence of two thirds, expel a member.” Therefore, a Senate bill would not constitutionally be able to create a rule for the House. The Senate bill does not create a Senate Rule because we felt it was important to give the SEC the full ability to prosecute Congressional trading on nonpublic information.

Q: Does the Senate STOCK Act cover the spouses of members?

A: No. Spouses of members are outside the scope of the Senate STOCK Act.

Q: Would any investments be exempt from the reporting requirement? Would it effect TSP?

A: Members and employees who choose to place their stock in holdings in blind trusts or mutual funds would continue to be exempt from the reporting requirement. This exemption is not explicitly carved out by the STOCK Act, it is already a part of Section 102 of the 1978 Ethics in Government Act. The act therefore would not impact member or staff TSPs.

Nathaniel Hoopes

Legislative Director

Senator Scott P. Brown (R-MA)



Discuss

17 Comments . Leave a comment below.
  1. Anyone remember the tax return stuff well?

    I seem to recall that when Warren and Brown released their tax returns, Warren’s included investment income from both herself and her husband, but Brown omitted the investment income of his wife.

  2. Maybe someone changed Brown's mind on it

    or maybe Brown himself realized it needed to include spouses. At any rate, he now believes it needs to include spouses and children. But I think children shouldn’t have to report their investment transactions to comply with this bill, that seems burdensome on private people. No one should be allowed to trade on insider information, not family and not old friends either, but no one says old friends should have to report all their transactions.

  3. This insider trading has been going on for years and years

    Why did John Kerry not do anything about it? What about Barney Frank or Ed Markey, where they not aware this was going on?

  4. it was a toothless bill from the onset ...

    which was then further watered down. Slap a name on a meaningless bill and make it sound like it actually does something and all of the legislature jumped all over it. Thanks Scott!

    You definitely learned something while Beacon Hill.

  5. Much ado about very little

    This was always about atmospherics anyway –a fairly trivial bill which allowed Brown to pretend that he actually does something as the People’s Senator other than consort with Kings and Queens and hide from interviews and anyone who might ask a difficult question.

  6. Just how many millions

    does Ayla have stashed away anyway?

  7. It isn't the first loophole uncovered in Republican Scott Brown's version of the STOCK Act.

    Brown’s version of the STOCK Act would allow Brown to help his own stock portfolio while he helped the big banks:

    The 2010 Wall Street reform legislation established a new regime to deal with failing mega-banks, and had included language to charge banks an annual fee designed to cover any of the expenses associated with cleaning up the mess and easing losses for the collapsing bank’s creditors. Brown also helped strip that provision from the bill, saving billions of dollars a year for big banks, including GE and Bank of America.

    Brown, who owns up to $50,000 of Exxon Mobil stock according to financial filings, also voted against ending federal subsidies for oil companies earlier in 2011.

    But this type of activity would not actually be curbed by Brown’s STOCK Act, because the legislation only deals with active trading — members of Congress who buy and sell stocks based on nonpublic political information pertaining to specific companies.

    Since Brown has been a longtime shareholder in all three companies, any legislative efforts that boosted the value of those stocks would not run afoul of the new rules included in his bill. A spokesman for Brown agreed that the bill would not curb members of Congress from voting on provisions that affect companies they have a stake in.

« Blue Mass Group Front Page

Add Your Comments

You must be logged in to post a comment.

Sun 23 Nov 7:46 PM