STOCK Act: President Obama Signs Bill That Would Kill Government Transparency Database


Keeping tabs of financial conflicts of interest on Capitol Hill just got more difficult. On Tuesday, President Obama signed a bill passed by Congress that would prevent financial disclosure forms filed by senior governmental employees from being posted online.

The bill passed both the House of Representative and the Senate on a voice vote. In a voice vote, now members of Congress's votes are not recorded. The Senate and House both cleared the legislation by unanimous consent, taking only ten seconds in the Senate and 14 seconds in the House of consideration to pass. The bill represents a major blow to government transparency, according to government watchdog groups.

The bill modifies the Stop Trading on Congressional Knowledge (STOCK) Act, a law passed to combat insider trading. The bill effectively repeals a provision that requires financial disclosure forms to posted online into a searchable database in order to be easily assessed. Proponents of repealing the measure argued that it would increase the risk of identify theft and other crimes against disclosures as well as security concerns for the government.

But such disclosure forms are technically already available to the public. Without the provision, the forms must be requested individually from government agencies. The Center for Responsive Politics and the Sunlight Foundation, two pro-government transparency organizations harshly criticized the bill. Lisa Rosenberg of the Sunlight Foundation said of the move, "The result: More corruption and less trust in government."

Dan Auble of the Center for Responsive Politics said of the bill,

"Without the provisions, the STOCK act is made toothless. Insider trading by members of Congress and federal employees is still prohibited, but the ability of watchdog groups to verify that Congress is following its own rules is severely limited because these records could still be filed on paper  an unacceptably outdated practice that limits the public's access.

This is not true disclosure."

The bill does not completely gut the STOCK Act. Federal workers would still be required to report securities trades over a $1,000 threshold within 45 days and make them available to the public. The president, vice president, members of Congress, candidates for Congress, Cabinet members, and deputy secretaries are still required to post financial transactions online. However the searchable database was killed along with the requirements that federal employees post transactions. 

However the searchable database was considered by some to be the most effective part of the act. Melanie Sloan of Citizens for Responsibility Ethics in Washington said that, "by getting rid of the online disclosure they get rid of the only effective part. It’s almost a useless act."

Rather than reforming the act to address privacy concerns, Congress just decided to get rid of those requirements entirely. The approach is known as "security through obscurity," the idea being that by making the system difficult, people who want to engage in malicious acts will be discouraged from accessing the information. The drawbacks of such a system are immediately obvious, as a criminal simply needs to be dedicated enough to go through the system in order to gain the information they desire.

The STOCK Act has already been criticized for being incomplete. In 2012, a loophole in the STOCK Act was discovered that could have allowed family members of lawmakers to still profit from inside information, which was promptly corrected. No word if they will fix other efforts at weakening the act soon.