During his Jan. 24 State of the Union address, President Barack Obama said, "Send me a bill that bans insider trading by members of Congress; I will sign it tomorrow."
On April 4, the president signed into law the STOCK Act, a bipartisan bill that prevents members and staff of Congress from using nonpublic information obtained during official duty to receive an unfair advantage in trading stocks.
What exactly is the STOCK Act, and what does it do?
According to the White House, the Stop Trading On Congressional Knowledge (STOCK) Act will:
-- ban insider trading based on non-public information for congressional members and staff
-- require members of Congress and governmental officials to report securities trades of more than $1,000 within 45 days and
-- mandate that public financial disclosure reports are readily available online.
The act also:
-- requires the forfeiture of federal pension for anyone guilty of violating this act
-- forbids senior government officials from participating in special access to Initial Public Offerings (IPOs)
-- requires the Government Accountability Office and the Congressional Research Service to produce a report on the role of political intelligence firms on the financial markets
-- requires senior governmental officials to submit, in writing, to their ethics office notification of outside job negotiations and
-- bans senior executives from Fannie Mae and Freddie Mac from receiving bonuses during any periods of government conservatorship after enactment of the bill.
There is a 90-day grace period before the bill takes effect.
Why is this bill necessary?
A "60 Minutes" expose called "Insiders" looked into congressional insider trading, and embarrassed Congress. (Rep. Nancy Pelosi called it a "right-wing smear;" Speaker John Boehner's office called it "idiotic"). The program, aired in November, solidified bipartisan support behind this bill.
Congress has faced unprecedented disapproval; recent approval numbers at 9 percent. CBS News also hinted at a feeling that many representatives approached congressional service as a stepping stone toward greater financial opportunities, instead of an honor or privilege.
Who introduced the bill and who sponsored it?
The original bill, H.R. 5015 (from March 28, 2006), was introduced by Rep. Brian Baird, D-Wash. It died in committee. It was re-introduced by Baird in 2007 and 2009 to meet a similar fate. H.R. 1148 (introduced by Rep. Timothy Walz, D-Minn.) and S. 1871 (introduced by Sen. Scott Brown, R-Mass., rewritten and reintroduced as S-1903 by Sen. Kirsten Gillibrand, D-N.Y., saw 93 percent of Congress co-sponsor.
The bill passed the House 417-2, and the Senate 96-3.