Stop Trading On Congressional Knowledge Act - STOCK Act

Ever get the feeling that legislators come up with the acronym for a law first, and then come up with the words to fit it? Yeah, neither do we.

Anyway, the “STOCK Act”—also known as the “Stop Trading On Congressional Knowledge Act”—was enacted in 2012 in an effort to prevent members of Congress from engaging in insider trading. That’s right: we legit have a special law to prevent our own members of Congress (and their staff members) from engaging in illegal trade activity. [facepalm]

Anyway, this act came about because members of Congress, and the people who work for them, are often privy to a bunch of confidential, sensitive, top-secret information. The kind of information that a person could use to make a killing in the stock market, if they were so inclined. Think about it: new regulations, defense contracts, spending bills…all of that stuff goes through Congress. And the sentiment behind the STOCK Act was that it sure would be unethical for the people in charge to use it for personal financial gain. Ergo, it was decided that (a) folks in Congress are not allowed to use non-public info to guide their personal investments, and (b) they need to disclose new mortgages and certain financial gains within 45 days. The hope is that the new regulations, on top of ethics rules that already exist, will help our elected officials resist the temptation to game the market.