WASHINGTON (Reuters) - The House of Representatives on Thursday overwhelmingly passed new curbs on insider trading by lawmakers and other government officials despite complaints from Democrats and some Republicans that key anti-corruption provisions were dropped.
The legislation, aimed at ensuring lawmakers do not profit from non-public knowledge they gain through their positions, is the most extensive effort to clamp down on Congress’ personal business dealings in years. Lawmakers have seized upon it amid approval ratings that continue to plumb new lows.
The House bill did not include a Senate-passed plan to impose new regulations on Washington insiders who collect “political intelligence” about pending legislation from lawmakers and their aides and sell it to Wall Street.
It also lacked Senate proposals to equip prosecutors with new legal tools to pursue public corruption cases and ban all gifts to public officials valued over $1,000.
Republican House Majority Leader Eric Cantor defended the bill, saying the 417-2 vote showed bipartisan support. Like the Senate version, it requires lawmakers, their employees and senior members of Executive Branch agencies to disclose stock trades within 30 days.
Democrats - none of whom voted against the measure - vowed to restore the deleted provisions before the bill is sent to President Barack Obama, who has promised a swift signature.
Even without the language that would require political intelligence operatives to register under lobbying laws, some experts say, the bill will change the way Capitol Hill works.
Congressional staffers, who freely trade gossip about legislative dealings over coffee, cocktails and in the back corridors of the Capitol, may start to clam up, for fear of spilling “insider” information that could spark damaging investigations, said Michael Mayhew, the founder of Integrity Research Associates, which advises fund managers on research compliance issues.
“Information has been the currency in D.C., and they’re going to learn that some of that is going to be off limits,” he said. “That is going to change behavior.”
Still, the clean-government bill has attracted massive support as lawmakers seek to polish their images after nasty fights over taxes and spending soured Americans on Congress.
But even a bill aimed at reaffirming the public’s trust in Congress has failed to silence the usual partisan bickering.
Many Democrats accused Cantor of caving in to Wall Street for dropping the provision to force registration of political intelligence operatives.
“We are missing a large gap by leaving out the provision on political intelligence - $100 million industry,” said Democratic Representative Sheila Jackson Lee.
Cantor argued that the provision was too broad, political intelligence was too hard to define and the implications for civil liberties needed further study.
He said he had strengthened the bill, in part by inserting a provision to explicitly bar lawmakers and officials in federal agencies and independent regulatory bodies from gaining preferential access to initial public stock offerings.
Republicans dubbed this the “Pelosi provision,” a reference to a CBS “60 Minutes” report about the husband of House Democratic leader Nancy Pelosi buying shares in Visa Inc’s 2008 IPO as tougher credit card regulations were pending before Congress. Pelosi, who has denied any special access or conflict of interest, said she supported the provision.
The bill also clarifies that lawmakers are subject to the same Securities and Exchange Commission rules that prohibit trading on non-public, or “insider,” information. While they were not necessarily excluded before, conflict with lawmakers’ rights of debate could have made prosecutions more difficult.
Editing by Mohammad Zargham