Deborah Ross Criticizes Richard Burr’s 2012 Vote Against the STOCK Act, Which Banned Insider Trading for Members of Congress | News
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Wednesday, August 31, 2016

Deborah Ross Criticizes Richard Burr’s 2012 Vote Against the STOCK Act, Which Banned Insider Trading for Members of Congress

Posted by on Wed, Aug 31, 2016 at 1:02 PM

U.S. Senator Richard Burr
  • U.S. Senator Richard Burr
Deborah Ross's campaign is attacking Senator Richard Burr for a 2012 vote that Burr made against a bill banning insider trading for top federal employees and requiring that financial disclosures of members of Congress and their employees be made readily available online—all while he owned hundreds of thousands of dollars in stock in natural gas companies and authored legislation helpful to the natural gas industry. 

Burr was one of just three senators, along with Democrat Jeff Bingaman and Republican Tom Coburn, who voted against the passage of the STOCK Act. (The final vote for the Senate was 96–3; in the House, it was 417 in favor and only two against.)

"Senator Burr is the classic example of what’s wrong with Washington," Ross said in a statement earlier this week. "He’s one of only three Senators to vote against a ban on insider trading for Members of Congress, all while he pushed bills that would benefit his investments. That’s not right, and it’s why I am laying out a plan that will help clean up politics and increase accountability for members of Congress."

At the time of the vote, Burr championed himself as a principled fighter for his vote against the STOCK Act. In an interview with 570 WWNC's Jerri Jameson in February 2012, Burr said this:

JAMESON: Now let me guess, you've got to be talking about the STOCK Act.

BURR: I am.

JAMESON: You know, I've asked some listeners for questions, and then I am mixing them in with some I have on my own, but that actually is something that somebody said, "Is it really necessary to pass law to make lawmakers follow laws that are already on the books?

BURR: It's ludicrous. That's why Dr. Tom Coburn and I were the two brave souls that walked up and said we shouldn't be doing this. We should be focused on jobs, the economy. We should be taking up real legislation. It's like me saying to you, "Jerri, before you come to work this morning and you're going to drive your car, I'm going to pass a law that says you have to have a driver's license."

JAMESON: Right.

BURR: I mean, it's insane.

JAMESON: They just need to enforce laws that are already on the books.

BURR: The laws that are currently on the books apply to all members of Congress and all staff, not limited staff.

JAMESON: Right, it prohibits government workers period from engaging in these financial transactions.

BURR: So we're going to have political theater this week as to whether it applies to the executive branch, whether it doesn't. The fact is SEC law applies to every person who trades in America.

Burr's assertion that the SEC law was doing a good enough job preventing insider trading ignored years of research to the contrary. A 2010 Wall Street Journal investigation showed that congressional staffers often had stock holdings in companies benefitting from legislation the staffers were pushing, and a 2004 analysis in the Journal of Financial and Qualitative Analysis showed "abnormal returns" in the stock investments of United States senators. (The researchers found the same conclusion seven years later, when they studied the returns on investment of members of the House of Representatives.)

According to OpenSecrets, Burr's estimated net worth increased by over 400 percent during his first decade in the Senate, from $506,011 in 2004 (the year he won election) to $2,636,270 in 2014. 

In theory, the STOCK Act sought to shed light on potential conflicts of interest by requiring top federal employees to disclose their financial holdings online. Even this attempt at transparency, however, had its limits. As Yale law professor Jonathan Macey wrote at the time:
On closer examination, it appears that what Congress really wants is to keep making the big bucks that come from trading on inside information but to trick those outside of the Beltway into believing they are doing something about this corruption. For one thing, the rules proposed for Capitol Hill are not like those that apply to the rest of us.

Ours are so broad and vague that prosecutors enjoy almost unfettered discretion in deciding when and whom to prosecute. Congress's rules would be clear and precise. And not too broad; in fact they are too narrow. For example, the proposed rules in the Stock bill are directed only at information related to pending legislation. It would appear that inside information obtained by a congressman during a regulatory briefing, or in another context unrelated to pending legislation, would not be covered.
If that wasn't enough, a 2013 change to the law made it so top-level White House and congressional staffers wouldn't have to follow those disclosure rules. (The change didn't apply to the president, vice president, members of Congress or candidates for Congress.)

After Burr's vote and loud defense of that vote, the Huffington Post investigated his own stock holdings and found some interesting stuff.

Burr has investments in the gas industry valued from $133,298 to $219,337, according to his 2010 filings. His portfolio includes $36,000 worth of stock in Chesapeake Energy Corp., the second-largest U.S. producer of natural gas. He also holds more than $25,000 in shares of Loews Corp., a holding company with subsidiaries engaged in the exploration, production, marketing and transmission of natural gas.

[...]

Burr, along with Georgia Republican Sen. Saxby Chambliss, and two other senators introduced S-1863 in November with bipartisan support. The measure would offer individuals and businesses tax credits for buying natural gas-fueled vehicles or converting existing fleets to run on the fuel. President Barack Obama on Friday said he supported the bill.

Reached Wednesday for comment on Burr’s STOCK Act vote, spokeswoman Becca Glover Watkins sent over this email, arguing that the STOCK Act didn’t ban congressional insider trading because congressional insider trading was already illegal: 
* Senator Burr agreed with the nonpartisan Congressional Research Service at the time the original STOCK Act was passed—that insider trading was already illegal and redundant laws are one of the many problems coming from Washington.
* Per the Congressional Research Service, the research arm of the Library of Congress: “It should be emphasized that there never was any exemption or exception from the ‘insider trading’ provisions of securities law for Members of Congress, congressional staff, or for other federal employees, and such persons were subject to the insider trading restrictions in the same manner as members of the general public.”
* Robert Khuzami, then Director of Enforcement at the Securities and Exchange Commission (SEC), said in a December 2011 hearing of the Senate Committee on Homeland Security and Governmental Affairs, “Trading by congressional members or their staffs is not exempt from the federal securities laws, including the insider trading prohibitions.”

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