II

112TH CONGRESS 1ST SESSION

S. 1871

To prohibit commodities and securities trading based on nonpublic information relating to Congress, to require additional reporting by Members and employees of Congress of securities transactions, and for other purposes.

IN THE SENATE OF THE UNITED STATES

A BILL
To prohibit commodities and securities trading based on nonpublic information relating to Congress, to require additional reporting by Members and employees of Congress of securities transactions, and for other purposes. 1 Be it enacted by the Senate and House of Representa-

2 tives of the United States of America in Congress assembled, 3 4

This Act may be cited as the Stop Trading on Con-

5 gressional Knowledge Act.

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SEC. 2. NONPUBLIC INFORMATION RELATING TO CONGRESS AND OTHER FEDERAL EMPLOYEES.

(a) COMMODITIES TRANSACTIONS.Section 4c of the

4 Commodity Exchange Act (7 U.S.C. 6c) is amended by 5 adding at the end the following: 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23
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(h) NONPUBLIC INFORMATION. (1) DEFINITIONS.In this subsection: (A) AGENCY.The term agency has the meaning given the term in section 551 of title 5, United States Code. (B) MATERIAL
TION.The NONPUBLIC INFORMA-

term material nonpublic informa-

tion (i) has the meaning given the term by the Commission by rule; (ii) includes any information that (I) a member or employee of Congress, or an employee of an agency, as applicable, gains by reason of that position or employment; and (II) the member or employee knows or should know has not been made available to the general public; and (iii) includes information that

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(I) is routinely exempt from disclosure under section 552 of title 5, United States Code, or otherwise protected from disclosure by law (including Executive orders and regulations); (II) is designated as confidential by an agency; or (III) has not actually been disseminated to the general public and is not authorized to be made available to the public on request. (2) NONPUBLIC
CONGRESS.Not INFORMATION RELATING TO

later than 270 days after the date

of enactment of this subsection, the Commission shall by rule prohibit any person from buying or selling any commodity for future delivery or swap while the person is in possession of material nonpublic information relating to any pending or prospective legislative action relating to the commodity if (A) the information was obtained by reason of the person being a Member or employee of Congress; or (B)(i) the information was obtained from a Member or employee of Congress; and

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(ii) the person knows that the information was so obtained. (3) NONPUBLIC
INFORMATION RELATING TO

OTHER FEDERAL EMPLOYEES.Not

later than 270

days after the date of enactment of this subsection, the Commission shall by rule prohibit any person from buying or selling any commodity for future delivery or swap while the person is in possession of material nonpublic information derived from Federal employment and relating to the commodity if (A) the information was obtained by reason of the person being an employee of an agency; or (B)(i) the information was obtained from an employee of an agency; and (ii) the person knows that the information was so obtained.. (b) SECURITIES TRANSACTIONS. (1) section (A) the term agency has the same meaning as in section 551(1) of title 5, United States Code; (B) the term Commission means the Securities and Exchange Commission; and DEFINITIONS.As used in this sub-

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(C) the term material nonpublic information (i) has the meaning given that term by rule of the Commission; and (ii) includes any information that a member or employee of Congress or an employee of an agency, as applicable, gains by reason of such position or employment, and that such member or employee knows or should know has not been made available to the general public, including information that (I) is routinely exempt from disclosure under section 552 of title 5, United States Code, or otherwise protected from disclosure by statute, Executive Order, or regulation; (II) is designated as confidential by an agency; or (III) has not actually been disseminated to the general public and is not authorized to be made available to the public on request. (2) NONPUBLIC
CONGRESS.Not INFORMATION RELATING TO

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later than 270 days after the date

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of enactment of this Act, the Commission shall, by rule, prohibit any person from buying or selling the securities or security-based swaps of any issuer while such person is in possession of material nonpublic information relating to any pending or prospective legislative action relating to such issuer, if (A) such information was obtained by reason of such person being a Member or employee of Congress; or (B) such information was obtained from a Member or employee of Congress, and such person knows that the information was so obtained. (3) NONPUBLIC
INFORMATION RELATING TO

OTHER FEDERAL EMPLOYEES.Not

later than 270

days after the date of enactment of this subsection, the Commission shall, by rule, prohibit any person from buying or selling the securities or securitybased swaps of any issuer while such person is in possession of material nonpublic information derived from Federal employment and relating to such issuer, if (A) such information was obtained by reason of such person being an employee of an agency; or

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7 1 2 3 4 5 (B) such information was obtained from such an employee, and such person knows that the information was so obtained.
SEC. 3. COMMITTEE HEARINGS ON IMPLEMENTATION.

(a) IN GENERAL.The Committee on Agriculture of

6 the House of Representatives shall hold a hearing on the 7 implementation by the Commodity Futures Trading Com8 mission of subsections (h) and (i) of section 4c of the Com9 modity Exchange Act (as added by section 2(b) of this 10 Act), and the Committee on Financial Services of the 11 House of Representatives shall hold a hearing on the im12 plementation by the Securities Exchange Commission of 13 subsections (d) and (e) of section 10 of the Securities Ex14 change Act of 1934 (as added by section 2(a) of this Act). 15 (b) EXERCISE
OF

RULEMAKING AUTHORITY.Sub-

16 section (a) is enacted 17 18 19 20 21 22 23

(1) as an exercise of the rulemaking power of the House of Representatives and, as such, shall be considered as part of the rules of the House, and such rules shall supersede any other rule of the House only to the extent that rule is inconsistent therewith; and (2) with full recognition of the constitutional right of the House to change such rules (so far as relating to the procedure in the House) at any time,

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8 1 2 3 4 in the same manner, and to the same extent as in the case of any other rule of the House.
SEC. 4. TIMELY REPORTING OF FINANCIAL TRANSACTIONS.

(a) REPORTING REQUIREMENT.Section 103 of the

5 Ethics in Government Act of 1978 is amended by adding 6 at the end the following subsection: 7 (l) Within 90 days after the purchase, sale, or ex-

8 change of any stocks, bonds, commodities futures, or other 9 forms of securities that are otherwise required to be re10 ported under this Act and the transaction of which in11 volves at least $1,000 by any Member of Congress or offi12 cer or employee of the legislative branch required to so 13 file, that Member, officer, or employee shall file a report 14 of that transaction with the Clerk of the House of Rep15 resentatives in the case of a Representative in Congress, 16 a Delegate to Congress, or the Resident Commissioner 17 from Puerto Rico, or with the Secretary of the Senate in 18 the case of a Senator.. 19 (b) EFFECTIVE DATE.The amendment made by

20 subsection (a) shall apply to transactions occurring on or 21 after the date that is 90 days after the date of the enact22 ment of this Act.

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SEC. 5. DISCLOSURE OF POLITICAL INTELLIGENCE ACTIVITIES UNDER LOBBYING DISCLOSURE ACT.

(a) DEFINITIONS.Section 3 of the Lobbying Disclo-

4 sure Act of 1995 (2 U.S.C. 1602) is amended 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23

(1) in paragraph (2) (A) by inserting after lobbying activities each place that term appears the following: or political intelligence activities; and (B) by inserting after lobbyists the following: or political intelligence consultants; and (2) by adding at the end the following new paragraphs: (17) POLITICAL
INTELLIGENCE ACTIVITIES.

The term political intelligence activities means political intelligence contacts and efforts in support of such contacts, including preparation and planning activities, research, and other background work that is intended, at the time it is performed, for use in contacts, and coordination with such contacts and efforts of others. (18) POLITICAL
INTELLIGENCE CONTACT.

(A) DEFINITION.The term political intelligence contact means any oral or written communication (including an electronic communication) to or from a covered executive branch
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official or a covered legislative branch official, the information derived from which is intended for use in analyzing securities or commodities markets, or in informing investment decisions, and which is made on behalf of a client with regard to (i) the formulation, modification, or adoption of Federal legislation (including legislative proposals); (ii) the formulation, modification, or adoption of a Federal rule, regulation, Executive order, or any other program, policy, or position of the United States Government; or (iii) the administration or execution of a Federal program or policy (including the negotiation, award, or administration of a Federal contract, grant, loan, permit, or license). (B) EXCEPTION.The term political intelligence contact does not include a communication that is made by or to a representative of the media if the purpose of the communication is gathering and disseminating news and information to the public.

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11 1 2 3 4 5 6 7 8 9 10 11 12 (19) POLITICAL
INTELLIGENCE FIRM.The

term political intelligence firm means a person or entity that has 1 or more employees who are political intelligence consultants to a client other than that person or entity. (20)
ANT.The

POLITICAL

INTELLIGENCE

CONSULT-

term political intelligence consultant

means any individual who is employed or retained by a client for financial or other compensation for services that include one or more political intelligence contacts.. (b) REGISTRATION REQUIREMENT.Section 4 of the

13 Lobbying Disclosure Act of 1995 (2 U.S.C. 1603) is 14 amended 15 16 17 18 19 20 21 22 23

(1) in subsection (a) (A) in paragraph (1) (i) by inserting after whichever is earlier, the following: or a political intelligence consultant first makes a political intelligence contact,; and (ii) by inserting after such lobbyist each place that term appears the following: or consultant; (B) in paragraph (2), by inserting after lobbyists each place that term appears the

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following: or political intelligence consultants; and (C) in paragraph (3)(A) (i) by inserting after lobbying activities each place that term appears the following: and political intelligence activities; and (ii) in clause (i), by inserting after lobbying firm the following: or political intelligence firm; (2) in subsection (b) (A) in paragraph (3), by inserting after lobbying activities each place that term appears the following: or political intelligence activities; (B) in paragraph (4) (i) in the matter preceding subparagraph (A), by inserting after lobbying activities the following: or political intelligence activities; and (ii) in subparagraph (C), by inserting after lobbying activity the following: or political intelligence activity; (C) in paragraph (5), by inserting after lobbying activities each place that term ap-

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pears the following: or political intelligence activities; (D) in paragraph (6), by inserting after lobbyist each place that term appears the following: or political intelligence consultant; and (E) in the matter following paragraph (6), by inserting or political intelligence activities after such lobbying activities; (3) in subsection (c) (A) in paragraph (1), by inserting after lobbying contacts the following: or political intelligence contacts; and (B) in paragraph (2) (i) by inserting after lobbying contact the following: or political intelligence contact; and (ii) by inserting after lobbying contacts the following: and political intelligence contacts; and (4) in subsection (d), by inserting after lobbying activities each place that term appears the following: or political intelligence activities.

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14 1 2 (c) REPORTS
LIGENCE BY

REGISTERED POLITICAL INTEL-

CONSULTANTS.Section 5 of the Lobbying Dis-

3 closure Act of 1995 (2 U.S.C. 1604) is amended 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23

(1) in subsection (a), by inserting after lobbying activities the following: and political intelligence activities; (2) in subsection (b) (A) in paragraph (2) (i) in the matter preceding subparagraph (A), by inserting after lobbying activities the following: or political intelligence activities; (ii) in subparagraph (A) (I) by inserting after lobbyist the following: or political intelligence consultant; and (II) by inserting after lobbying activities the following: or political intelligence activities; (iii) in subparagraph (B), by inserting after lobbyists the following: and political intelligence consultants; and (iv) in subparagraph (C), by inserting after lobbyists the following: or political intelligence consultants;

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15 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 (B) in paragraph (3) (i) by inserting after lobbying firm the following: or political intelligence firm; and (ii) by inserting after lobbying activities each place that term appears the following: or political intelligence activities; and (C) in paragraph (4), by inserting after lobbying activities each place that term appears the following: or political intelligence activities; and (3) in subsection (d)(1), in the matter preceding subparagraph (A), by inserting or a political intelligence consultant after a lobbyist. (d) DISCLOSURE
AND

ENFORCEMENT.Section 6(a)

17 of the Lobbying Disclosure Act of 1995 (2 U.S.C. 1605) 18 is amended 19 20 21 22 23

(1) in paragraph (3)(A), by inserting after lobbying firms the following: , political intelligence consultants, political intelligence firms,; (2) in paragraph (7), by striking or lobbying firm and inserting lobbying firm, political intelligence consultant, or political intelligence firm; and

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16 1 2 3 4 (3) in paragraph (8), by striking or lobbying firm and inserting lobbying firm, political intelligence consultant, or political intelligence firm. (e) RULES
OF

CONSTRUCTION.Section 8(b) of the

5 Lobbying Disclosure Act of 1995 (2 U.S.C. 1607(b)) is 6 amended by striking or lobbying contacts and inserting 7 lobbying contacts, political intelligence activities, or polit8 ical intelligence contacts. 9 10 (f) IDENTIFICATION
FICIALS.Section OF

CLIENTS

AND

COVERED OF-

14 of the Lobbying Disclosure Act of

11 1995 (2 U.S.C. 1609) is amended 12 13 14 15 16 17 18 19 20 21 22 23

(1) in subsection (a) (A) in the heading, by inserting OR POLITICAL INTELLIGENCE

after LOBBYING;

(B) by inserting or political intelligence contact after lobbying contact each place that term appears; and (C) in paragraph (2), by inserting or political intelligence activity, as the case may be after lobbying activity; (2) in subsection (b) (A) in the heading, by inserting OR POLITICAL INTELLIGENCE

after LOBBYING;

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17 1 2 3 4 5 6 7 8 9 10 (B) by inserting or political intelligence contact after lobbying contact each place that term appears; and (C) in paragraph (2), by inserting or political intelligence activity, as the case may be after lobbying activity; and (3) in subsection (c), by inserting or political intelligence contact after lobbying contact. (g) ANNUAL AUDITS
TROLLER AND

REPORTS

BY

COMP-

GENERAL.Section 26 of the Lobbying Disclo-

11 sure Act of 1995 (2 U.S.C. 1614) is amended 12 13 14 15 16 17 18 19 20 21 22 23

(1) in subsection (a) (A) by inserting political intelligence firms, political intelligence consultants, after lobbying firms; and (B) by striking lobbying registrations and inserting registrations; (2) in subsection (b)(1)(A), by inserting political intelligence firms, political intelligence consultants, after lobbying firms; and (3) in subsection (c), by inserting or political intelligence consultant after a lobbyist.
SEC. 6. EFFECTIVE DATE.

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Subject to section 4(b), this Act and the amendments

25 made by this Act shall take effect at the end of the 90-

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18 1 day period beginning on the date of the enactment of this 2 Act.

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