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Ethics nominee asks Congress to change insider trading law
Monday - 7/23/2012, 6:13am EDT
Walter Shaub Jr. told the Senate Homeland Security and Governmental Affairs Committee that even though the Stop Trading on Congressional Knowledge Act has good intentions, employee groups and federal workers are worried that financial disclosures required by the law could be misused. The testimony was part of his nomination hearing.
Many of the concerns stem from "people fearing for the safety of their children to the extent [the financial information] reveals where they are at any point," Shaub said. "But also overseas, we've been hearing serious concerns about safety."
The STOCK Act aims to prevent members of Congress and federal employees from trading stocks, bonds, commodities and other securities based on non-public information they receive on the job. The law requires lawmakers, political appointees and certain senior executives to submit reports within 45 days for transactions that exceed $1,000.
OGE will post the disclosures in a searchable database "on a much larger scale than ever before," Shaub said. "These have always been public reports, but it's an issue of magnitude. They're now going to be on the Internet broadly."
Shaub, who currently is OGE's deputy general counsel, said his agency is examining its authority for enforcing the new legal mandates in a way that protects privacy. But he also urged Congress to revise the law.
"Because I think we can strike a balance between privacy and safety, and make things publicly available enough to help the public understand the financial motivations and interests of its leaders," he said.
Open government groups have praised the STOCK Act as the right solution to improve transparency and accountability in government.
Congress originally designed the law to only apply to themselves and their staffs.
But lawmakers rightly expanded its scope, said Sean Moulton, director of federal information policy at OMB Watch, in an interview with Federal News Radio shortly after President Obama signed the bill in April.
Employees in the executive branch "have just as much responsibility to act in the public interest and not in their own financial interest and they have just as much information about contracts that are going out or decisions that are being made, to file lawsuits against some company," Moulton said. "So there's still a lot of information inside the executive as well as the legislative branch that can be used, or I should say misused for a person's own financial gain."
Moulton said he understands employees' concerns about privacy. But he also believes the options for preventing insider trading by lawmakers and federal employees are limited.
"And if there were another way to create the kind of accountability that we need here without revealing these details, I think there'd be a lot of interest in it," he said. "But right now, these [public disclosures provide] the facts that you need. If you don't know who owns stock in what, and at what amount, then you can't be sure whether or not there's been a conflict of interest."