In 2012, Congress enacted the Stop Trading on Congressional Knowledge Act (or the "STOCK Act"), in an effort to ban insider trading by members of Congress. The STOCK Act initially prohibited members of Congress (or their aides) from using information obtained through their government activity to trade stocks. In addition, the STOCK Act required weekly disclosure by public officials of their stock trading activity. This past April, Congress unanimously approved a change to the STOCK Act. This change, which was enacted into law on April 15, 2013, eliminates the requirement in the STOCK Act to make available on official websites the financial disclosure forms of employees of the executive and legislative branches. The President, the Vice President, members of and candidates for Congress remain required to make weekly disclosures of their stock trading activity.
Following the adoption of this change, the Senate intends to introduce a new bill, which would potentially require political intelligence firms to disclose their names and client lists, similar to disclosure required by lobbying firms. This requirement was part of the original bill that became the STOCK Act, but did not remain in the final version of the law. Investors occasionally gain market intelligence based on discussions and information passed between public officials and so-called "political intelligence firms." Law firms, brokerages and other organizations gather political information (e.g., upcoming government actions) that could influence the financial markets and provide this information to investors and companies that could be impacted by such government actions.
While no bill has been formally introduced yet, on May 8, 2013, Senator Grassley made a statement in support of the legislative action he is expected to introduce in the Senate. He explained that "Wall Street has been harvesting expertise and tidbits of information from Washington, D.C., for years while keeping us largely in the dark. In fact, the political intelligence industry is so big and so opaque that the GAO was unable to quantify it or judge its size, despite a year of investigating. Political intelligence firms extract pieces of information from the government and use that intelligence to make money on Wall Street." In his statement, he explained that collecting information and analyzing such information is not illegal, nor should it be. However, while most of Congress's actions are public, he is seeking greater transparency in the government and to provide government officials with more information on the persons with whom they may be sharing information.