The long-standing federal insider trading laws do not expressly apply to Members of Congress and their staffs. The recently passed STOCK Act is intended to close this apparent gap, by amending the insider trading laws to prohibit Members of Congress and their staffs from using insider information acquired in the exercise of their official duties for personal gain. But will the STOCK Act actually serve its intended function?
The Speech or Debate Clause, a relatively obscure clause of the United States Constitution, may thwart attempts to enforce the STOCK Act against its intended targets on the Hill. Instead, because the Act likely provides liability for “tippees” (persons that receive and trade based on material non-public information), the STOCK Act’s impact may fall hardest on private parties who regularly receive information from Members or their staffs.