State of the Union

President Obama delivered his annual State of the Union ("SOTU") address to Congress on January 24. The address included a proposal by the president that would prohibit individuals who bundle campaign contributions from lobbying Congress, and similarly prohibit lobbyists from bundling campaign contributions. It is unclear if Obama will submit a formal legislative proposal to Congress regarding this prohibition, however, with just eight months until the election, it is unlikely Congress would restrict its ability to raise money.

Stop Trading on Congressional Knowledge (STOCK) Act

On February 2, the Senate passed the Stop Trading on Congressional Knowledge (STOCK) Act (S. 2038) by an overwhelming 96-3 vote. While the main component of the STOCK Act is a prohibition on Members of Congress from trading on non-public information, the Senate-passed bill contains a new registration and reporting requirement under the Lobbying Disclosure Act (LDA) for "political intelligence consultants" that conduct "political intelligence activities." The bill defines political intelligence "activities" as political intelligence contacts and efforts in support of such contacts, including preparation and planning activities, research, and other background work that is intended, at the time it is performed, for use in contacts, and coordination with such contacts and efforts of others. Broadly defined, a political intelligence "contact" is any oral or written communication to or from a covered executive or legislative branch official designed to attain information for use in analyzing securities markets or informing investment decisions. The information attained could involve legislation, rules and regulations, Executive Orders, negotiations, grants, and contracts, among several other governmental decisions. Registration of political intelligence consultants would be required for making one political intelligence contact. On February 9, the House passed a modified version of the STOCK Act by a 417-2 vote. The House-passed STOCK Act does not contain the registration and reporting obligations for political intelligence consultants or activities. Rather, the House bill requires the Government Accountability Office (GAO) to conduct a study in consultation with the Congressional Research Service (CRS) regarding political intelligence.

Many Senators are pushing for a formal House/Senate conference to resolve the differences between the two bills, as opposed to a leadership decision to pass the House-passed bill without amendment. The Senate requirements for registering and reporting of political intelligence activities are broadly defined and would require substantial clarifying guidance from the Secretary of the Senate and Clerk of the House of Representatives. Many activities conducted on a regular basis by lobbyists, consultants, and the financial services sector could be included as political intelligence activities and subject to disclosure. How these requirements would impact currently-registered lobbyists and lobbying organizations, or entities such as hedge funds and private equity firms that currently operate without public disclosure requirements, remains unclear. With vast bipartisan support in the House and Senate, some version of the STOCK Act, supported by President Obama in his SOTU, will likely become law in 2012.