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SEA cites identity theft as unintended consequence of STOCK Act
Tuesday - 6/19/2012, 1:14pm EDT
This story was updated at 7:40 a.m. June 20 to include comments from the SEA president.
A law signed in April by the President banning insider trading by congressional members and federal employees will place unnecessary reporting burdens on senior executives and make them vulnerable to identity theft, according to the Senior Executives Association.
"New public disclosure requirements mandated by the STOCK Act will serve no purpose that we are aware of, will jeopardize the privacy and integrity afforded by [the] Ethics in Government Act system and, in our opinion, will hinder government performance in a number of ways," according to an SEA position paper.
The STOCK Act — short for Stop Trading on Congressional Knowledge — would put the financial information of tens of thousands of federal executives in a searchable online database set up by the Office of Government Ethics.
The people covered under the act are members of Congress, political appointees and senior executives whose base pay is 20 percent more than the base pay of a GS-15 step 1. These feds would be required to file reports of new transactions in stocks, bonds, commodities or other securities that exceed $1,000.
SEA argues current regulations already require these public employees to annually file financial reports. Anyone now can request this financial information by submitting a written request form.
The creation of an online database under the STOCK Act would make the financial information available to anyone — "criminal enterprises and foreign interests included," according to the position paper. SEA pointed to the recent cyber breach of about 123,000 Thrift Savings Plan accounts.
How the website will track users is not yet clear. But Carol Bonosaro, president of SEA, told The Federal Drive with Tom Temin and Emily Kopp that even a log-in requirement will not eliminate the threat of identity theft.
"What's to prevent Bugs Bunny from logging in? You really have no way of verifying the identity," Bonosaro said.
The STOCK Act also eliminates safeguards to protect the financial information of federal employees' spouses — even if they are in the intelligence community, SEA said.
The provisions of the STOCK Act create "another layer of Big Brother," said Bill Bransford, senior counsel for SEA, in an interview in March with Federal News Radio.
Open government groups — including OMB Watch — say such requirements are necessary to prevent insider trading and conflicts of interest.
However, SEA said the reporting burden and vulnerability to identity theft is going to have a "chilling effect" on recruiting career executives.
"We have heard from a number of GS-14s and 15s that impending implementation of the STOCK Act has caused them to abandon their plans to seek entry into the Senior Executive Service. In addition, many current senior executives are considering retirement or falling back to GS-15 in light of the new rules," according to SEA.