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Court puts temporary hold on STOCK Act reporting requirement
Friday - 9/14/2012, 9:53am EDT
Judge Alexander Williams of the District Court of Maryland issued the preliminary injunction on Section 11 of the Stop Trading on Congressional Knowledge Act on Thursday, in response to a lawsuit filed by the Senior Executives Association and other organizations, claiming the bill's disclosure provision was an invasion of privacy.
In his opinion, Williams wrote the plaintiffs had shown "a likelihood of prevailing on the merits of their right to privacy claim."
If the court denied the preliminary injunction, the "plaintiffs' financial data will be subject to disclosure even though the United States has yet to identify interests sufficient to outweigh this irreparable harm," Williams wrote.
Last month, President Obama signed a law delaying the expansion of the STOCK Act until Sept. 30.
The STOCK Act's aim is to ban insider trading by congressional members and federal employees. The people covered under the act are members and employees of Congress, as well as 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 to the Office of Government Ethics.
SEA had been a vocal critic of the reporting requirement, citing identity theft as an unintended consequence of the legislation.
"SEA does not object to financial reporting requirements, but does object to making the personal financial information of Senior Executives subject to invasive public scrutiny while serving no legitimate public purpose." said Carol Bonosaro, SEA's president, in a statement last month.
The federal government now has a Sept. 24 deadline to file a brief in response to the preliminary injunction. The court will either uphold the injunction or reverse it, depending on how compelling a case the government makes for the disclosure requirement, said Bill Bransford, general counsel for SEA, in a phone interview with Federal News Radio.
Bransford said he doesn't expect a final decision from the court before Oct. 31.
In the meantime, Congress could act to change the disclosure requirement.
"Congress might act during the month of September and might create a different law, and the court would have different considerations," Bransford said. He added, "Exactly what Congress will do, I don't know."
Bransford characterized the language of the preliminary injunction as a "strongly worded opinion supporting the plaintiffs' argument that putting their personal financial information on the Internet is an unwarranted violation of their personal privacy and the personal privacy of their family."