The abrupt cancellation of the House Judiciary Committee’s markup of the STOCK Act is a slap in the face to the American people.  The move by House Majority Leader Eric Cantor comes on the same day that a majority of House Members have co-sponsored the legislation.  Once again, congressional leadership is putting its own interests above those of citizens.

Majority Leader Cantor has put the kibosh on a bill - now cosponsored by more than 220 House Members - to ensure that Members of Congress are sufficiently covered by anti-insider trading statutes.  This cynical move, based on the hope that the public won’t notice, only reinforces the low-standing of the 112thCongress and speaks volumes of the root causes of the record-low public approval ratings for this Congress.

Speaker Boehner must reject this move by Rep. Cantor and see to it that a well-drafted bill protecting against insider trading by Members of Congress and their staffs moves out of the House immediately.

The Legal Center and a coalition of reform organizations have repeatedly urged Members to support the Stock Act. To read the letters, click here, here, and here.

Today, the Campaign Legal Center, and a coalition of reform groups, called again for a ban on congressional insider trading as the House Financial Services Committee held a hearing downplaying the need for the legislation. In a letter to both houses of Congress, the groups urged Members to quickly enact legislation to ban the practice.

The “Stop Trading on Congressional Knowledge Act” (STOCK Act) has been introduced previously but garnered few sponsors until a damning report aired recently on the CBS News magazine “60 Minutes”.  After the report and the ensuing public outcry, Members rushed to co-sponsor the legislation and schedule hearings.

“The public is absolutely right to be outraged that Members may have used their elective office to line their own pockets,” said Meredith McGehee, Campaign Legal Center Policy Director.  “Sadly it takes the sniff of a scandal to spur Congress into even considering regulating its own conduct.  But the witness list and the tone of much of the questioning today raises concerns that Speaker Boehner – with the tacit support of a number of Members from both parties - may well attempt to slow-walk this legislation in the hope that public outrage will die down.  Ignoring the public fury on this topic would be a grave mistake for Leadership of either party.”

The organizations signing the letter include the Campaign Legal Center, Citizens for Responsibility and Ethics in Washington (CREW), Common Cause, Democracy 21, Public Citizen, Sunlight Foundation and U.S. PIRG.

Companion bills have been introduced in the Senate and a hearing was held last week.

The full text of the letter follows below.

December 6, 2011

The Hon. Harry Reid

The Hon. Mitch McConnell

The Hon. John Boehner

The Hon. Nancy Pelosi

All Members of the U.S. Senate and House of Representatives

RE:     Current law has not prevented Congressional insider trading. Congress must pass the “Stop Trading on Congressional Knowledge Act”

Dear Senator Reid, Senator McConnell, Representative Boehner, Representative Pelosi, Members of Congress:

Our organizations – Campaign Legal Center, Citizens for Responsibility and Ethics in Washington, Common Cause, Democracy 21, Public Citizen, Sunlight Foundation and US PIRG  – strongly support passage of the “Stop Trading on Congressional Knowledge Act” (STOCK Act) designed to prevent congressional insider trading. In spite of recent movement intended to deflect the need for the bill, we believe Congress should quickly enact a strong bill with clear language prohibiting Members of Congress from using insider information to make stock decisions.

While we welcome the recent memo released by the House Committee on Ethics indicating that insider trading violates ethics laws, the memo is not a substitute for clear, enforceable statutes. At the House Committee on Financial Services hearing today, a number of witnesses claimed that current insider trading laws apply to Members of Congress. Unfortunately, both miss the point. The issue is not whether current law applies to Members of Congress, but whether current law is sufficient to curtail insider trading by Members. Recent news accounts raising the specter of Members of Congress using non-public information to make decisions about stock trades indicates that it is not. A strong bill that clearly prohibits congressional insider trading is required.

Members of Congress are, of course, privy to a great deal of non-public information that would impact stock prices. There is evidence to suggest that such information has been used for their own personal gain, yet, to our knowledge, no enforcement action for insider trading has been taken against a Member of Congress. Enforcement agencies will remain reluctant to prosecute insider trading by Members of Congress until Congress passes legislation that provides, in no uncertain terms, clear guidance that they, like the general public, are banned from using insider information to make decisions about stock transactions.

In addition to preventing self-dealing, passage of the STOCK Act provides the opportunity to increase transparency about legal trades. Members of Congress should be required to submit information about stock transactions soon after they are made. The Clerk of the House and the Secretary of the Senate should then be required to publicly disclose—quickly and online—the information submitted by the Members.

There is momentum for the STOCK Act because the specter of insider trading by Members of Congress further damages the public confidence in a Congress whose approval rating hovers around a record low 10%. Those who would prefer to keep the status quo intact should not derail the effort with distractions claiming current law is sufficient. Furthermore, mandatory blind trusts are not a solution to the problem. “Blind trusts” are often not blind at all to the participants, and we do not support trading public disclosure for secrecy. Congress has the responsibility to ensure that it is subject to the same laws against self-dealing that apply to the general public, and that those laws are enforced. Passage of the STOCK Act is critical for Congress to help restore the public’s trust in the institution.

Sincerely,

Campaign Legal Center

Citizens for Responsibility and Ethics in Washington

Common Cause

Democracy 21

Public Citizen

Sunlight Foundation

US PIRG

The Federal Election Commission today voted to a 3-3 deadlock in response to an advisory opinion request from Super PAC American Crossroads for permission to “fully coordinate” ads with candidates, using unlimited corporate and individual contributions, without those ads being considered prohibited “coordinated expenditures.”

“The result of today’s deadlock is that American Crossroads did not get the green light it sought  from the FEC to fully coordinate ads with candidates,” said Campaign Legal Center FEC Program Director Paul S. Ryan.  “Instead, any ads run by American Crossroads that feature federal candidates will be subject to legal scrutiny and may be deemed illegal.”

The Campaign Legal Center, together with Democracy 21, filed comments with the Commission on November 14, urging the Commission to reject American Crossroads’ request for permission to coordinate its ads with candidates.

“American Crossroads’ request was absurd and flew in the face of decades of Supreme Court decisions upholding laws to prevent political corruption,” said Ryan.  “The Supreme Court has long recognized the importance of contribution limits to preventing corruption, and that expenditures coordinated with candidates must be treated as contributions in order to prevent easy circumvention of the limits.  We applaud Chairwoman Bauerly and Commissioners Weintraub and Walther for their efforts today to maintain the integrity of the contribution limits.”

To read the comments filed by the Campaign Legal Center and Democracy 21, click here.

Today, the House Judiciary Committee unanimously passed the “Clean Up Government Act of 2011” (H.R. 2572).  The legislation would restore important tools for federal prosecutors fighting public corruption – specifically revisions to the Honest Services and illegal gratuities statutes – that have gradually been pared away by adverse court decisions.  A companion measure has been reported out of the Senate Judiciary Committee and is awaiting full Senate action.

Campaign Legal Center Policy Director Meredith McGehee issued the following statement after the vote.

“Today’s Committee vote was encouraging but the preceding debate was not.  Fortunately the verbal heel-dragging ceased when the vote was called. Still, there may be attempts, cloaked in the guise of concerns about over-criminalizing politics, to weaken the measure as it moves forward.  This legislation is too important to fall victim to Congress’ reticence to pass anything that might hold Members accountable.  .  With record low approval ratings, it is vital for Congress to show its willingness to get serious about combating public corruption.

“We urge Speaker Boehner to schedule a full House vote on H.R. 2572 this month before Congress adjourns as should Majority Leader Harry Reid on the Leahy-Cornyn bill in the Senate.  Representatives Jim Sensenbrenner (R-WI) and Mike Quigley (D-IL) deserve credit for fashioning a bipartisan bill that could pass this usually polarized Committee unanimously.”

To read the letter sent yesterday to the full committee by the Legal Center and a coalition of reform groups, click here.

Today, the Campaign Legal Center, and a coalition of reform groups, renewed its call for a ban congressional insider trading and urged the Senate Homeland Security & Governmental Affairs Committee to quickly move legislation forward to the full Senate.  The Committee is scheduled to hold a hearing this afternoon on the topic and a letter from the groups in support of the legislation to curb the practice was entered into the committee record.

Efforts to ban insider trading by Members have taken on new life since a scathing report on the practice was aired on the CBS News Magazine 60 Minutes last month.  More than 100 additional co-sponsors have signed on to a House bill after the report aired, and related legislation was quickly introduced in the Senate.

“It is both encouraging and sad that this bill suddenly gained traction after a 60 Minutes report.  Prior to that, Members in both houses were more than willing to ignore the pleas of the original sponsors,” said Meredith McGehee, Campaign Legal Center Policy Director.  “It is unfortunate that such vehement public outrage is needed to spur congressional support for legislation, but that is regrettably how things work on Capitol Hill, particularly when Members are faced with making rules that deal with policing their own conduct.”

Sen. Kirsten Gillibrand (D-NY) and Sen. Scott Brown (R-MA), who introduced S. 1903 and S. 1871 respectively, each testified today regarding their new legislative efforts to apply the laws against insider trading to members and staff of Congress and provide a system of transparency for commodities and securities trading to help ensure that the law is monitored and enforced. Together, the bills have a combined 16 Senate co-sponsors.  In the House the STOCK Act (H.R. 1148) was introduced by Reps. Timothy Walz (D-MN) and Louise Slaughter (D-NY).

The organizations signing the letter include the Campaign Legal Center, Citizens for Responsibility and Ethics in Washington (CREW), Common Cause, Democracy 21, Public Citizen, Sunlight Foundation and U.S. PIRG.

The hearing is scheduled for 2:30 pm in Room 342 of the Dirksen Senate Office Building.

The full text of the letter follows below.

Dec. 1, 2011

The Hon. Joseph Lieberman, Chairman

The Hon. Susan Collins, Ranking Member

Committee on Homeland Security & Government Affairs

U.S. Senate, 340 Dirksen Senate Office Building

Washington, D.C. 20510

RE:     Support the “Stop Trading on Congressional Knowledge Act”

Dear Chairman and Ranking Member:

Our organizations – Campaign Legal Center, Common Cause, Democracy 21, Public Citizen, Sunlight Foundation and US PIRG – strongly support passage of the “Stop Trading on Congressional Knowledge Act” (STOCK Act) designed to prevent congressional insider trading, and encourage you to move the legislation for a full floor vote.

Sen. Kirsten Gillibrand (D-NY) introduced S. 1903 and Sen. Scott Brown (R-Mass.) introduced S. 1871 in an effort to apply the laws against insider trading to members and staff of Congress and provide a system of transparency for commodities and securities trading to help ensure that the law is monitored and enforced. Together, the bills have a combined 16 co-sponsors.

Under current law, “insider trading” is defined as the buying or selling of securities or commodities based on non-public information in violation of confidentiality – either to the issuing company or the source of information. Congressional officials and employees in the course of official business, it is often believed, do not owe a duty of confidentiality to these companies and thus are not liable for insider trading.

Legislation is needed to provide a clear and balanced application of the laws against insider trading to both the private and public sectors and offer the important tool of disclosure for ensuring compliance with the law.

We encourage all members of the Senate to join in a bipartisan effort to apply the insider trading laws uniformly across Congress before any new scandals may arise.

Sincerely,

Campaign Legal Center

Common Cause

Democracy 21

Public Citizen

Sunlight Foundation

US PIRG

Today a coalition of reform groups urged the full U.S. House of Representatives to vote against legislation to repeal the presidential public financing system and terminate the Election Assistance Commission by folding its responsibilities into the horribly dysfunctional Federal Election Commission.

The legislation, H.R. 3463, is expected to be voted on by the House tomorrow.

The reform groups sending the letter include: Americans for Campaign Reform, Brennan Center for Justice, Campaign Legal Center, Common Cause, Citizens for Responsibility and Ethics in Washington (CREW), Democracy 21, League of Women Voters, People For the American Way, Public Campaign, Public Citizen, and U.S. PIRG.

Heading into the closing days of this Congressional session, with a number of key issues unresolved, tomorrow’s vote represents another threat to the health of our democracy and yet another distraction from the vital and unfinished business before the House.  The effort represents the third time this year that House Republican leaders have held votes on legislation to end the presidential public financing system and the second time they have held votes on terminating the Election Assistance Commission.

The full text of the letter follows below.

 Reform Groups Urge You to Vote No on H.R. 3463 This Week

 November 30, 2011

 Dear Representative,

Our organizations strongly urge you to oppose H.R. 3463, legislation introduced by Representative Greg Harper (R-Miss.) to repeal the presidential public financing system and terminate the Election Assistance Commission. The legislation is expected to be considered by the House on Thursday.

Our organizations include: Americans for Campaign Reform, Brennan Center for Justice, 
Campaign Legal Center, Common Cause, Citizens for Responsibility and Ethics in Washington (CREW), Democracy 21, League of Women Voters, People For the American Way, Public Campaign, Public Citizen and U.S. PIRG

Dangerous campaign finance developments in the 2012 presidential campaign show just how essential it is to repair, not repeal, the presidential public financing system. In the aftermath of the destructive Citizens United decision, the financing of the 2012 presidential election is being dominated by bundlers, Super PACs, candidate-specific Super PACs, secret contributions and the like. This is the kind of campaign money that leads to scandal and corruption.

The presidential public financing system worked well for the nation for most of its existence, providing presidential candidates with the funds needed to mount viable candidacies without becoming obligated to special-interest influence money. The system became outmoded in recent years as a result of Congress failing to take any action to update the system to respond to the increased costs of running a presidential campaign.

A 2008 USA TODAY/Gallup poll on the eve of the 2008 presidential election found that over 70 percent of the American public supported the continuation of the presidential financing system, and only 20 percent favored eliminating it.

Presidential candidates are entitled to have the option of running for President on a system based on small donations and public funds as an alternative to becoming obligated and indebted to influence-seeking funders. This alternative system is the same one that President Ronald Reagan voluntarily participated in three times, including his two successful runs for President and President Bill Clinton voluntarily used twice to successfully run for President. Every president elected from 1976 to 2004 has made use of the presidential public financing system

H.R. 414 introduced this year by Representatives David Price (R-NC) and Chris Van Hollen (D-MD) would repair the presidential public financing system to take account of the current costs of running a presidential campaign and to increase the incentives for small donors to contribute to presidential candidates.

We strongly urge House members to reject the effort to repeal the presidential public financing system and to co-sponsor H.R. 414, the Price-Van Hollen bill.

H.R. 3463 also seeks to terminate the Election Assistance Commission and transfer some of its functions to the Federal Election Commission, a dysfunctional agency. We strongly urge you to reject this effort.

Congress should strengthen, not terminate, the EAC and ensure that the agency can perform its critical functions in data collection, research, and information sharing among elected officials at every level, the public and concerned organizations. Congress should ensure that the EAC has sufficient authority to carry out these responsibilities.

It makes no sense, furthermore, to transfer EAC functions to the FEC, which is widely recognized as an ineffectual and discredited agency. There is no basis for providing an agency that is paralyzed and incapable of carrying out its own responsibilities with a new area of additional responsibilities.

The presidential public financing system should be repaired, not repealed. The Election Administration Commission should be strengthened, not terminated.

We strongly urge you to vote no on H.R. 3463.

Americans for Campaign Reform

Brennan Center for Justice

Campaign Legal Center

Common Cause

Citizens for Responsibility and Ethics in Washington (CREW)

Democracy 21

League of Women Voters

People For the American Way

Public Campaign

Public Citizen

U.S. PIRG

Today, the Campaign Legal Center and a coalition of reform groups called on the House Judiciary Committee to pass the bipartisan “Clean Up Government Act of 2011” (H.R. 2572) at a markup tomorrow.  This legislation would restore important tools for federal prosecutors fighting public corruption – specifically revisions to the Honest Services and illegal gratuities statutes – that have gradually been pared away by adverse court decisions.

 The full Judiciary Committee is scheduled to markup H.R. 2572 tomorrow, Thursday December 1 at 10:00 am in Room 2141 Rayburn House Office Building.

“This is legislation is vitally important if prosecutors are to stand any chance of holding public officials accountable for most public corruption,” said Meredith McGehee, Campaign Legal Center Policy Director.  “Most public officials are not foolish enough to jot down a price list for earmarks on a cocktail napkin like former Rep. Randy ‘Duke’ Cunningham (R-CA), but a series of court rulings have stripped prosecutors of important anti-corruption tools other than the bribery statute which requires a quid pro quo.  ”

H.R. 2572 responds to last year’s Supreme Court decision in Skilling v. United States, which eliminated an entire category of deceptive, fraudulent and corrupt conduct from the Honest Services fraud statute.  The “Clean Up Government Act” would restore that statute in line with Court’s direction for more clarity.  In addition, the bill would restore the illegal gratuities statute so that public officials may not accept gifts given because of their governmental position and makes clear public officials who accept private compensation for using their the powers their jobs afford them may now be subject to prosecution.  With this statute significantly compromised by the Court, prosecutors have had their hand weakened and have had to turn to other statutes not as well suited to prosecute public corruption  Companion legislation (S. 401) has already passed out of the Senate Judiciary Committee, sponsored by Sen. Patrick Leahy (D-VT) and Sen. John Cornyn (R-TX).

The reform groups sending the letter include: the Campaign Legal Center, Common Cause, Citizens for Responsibility and Ethics in Washington (CREW), Democracy 21, League of Women Voters, Public Campaign, Public Citizen, and U.S. PIRG.

The full text of the letter follows below.

November 30, 2011

Honorable Lamar Smith, Chairman

Honorable John Conyers, Ranking Member

House Committee on the Judiciary

United States House of Representatives

Washington, DC 20510

 Re:  Full Committee Markup of H.R. 2572, the “Clean Up Government Act of 2011

Sent Via Fax

Dear Chairman Smith, Ranking Member Conyers and Members of the Committee:

Today our organizations write to strongly endorse and call for swift committee passage of the “Clean Up Government Act of 2011” (H.R. 2572), which is scheduled for full committee markup on December 1.  Among other things, this legislation will restore important tools for federal prosecutors fighting public corruption – revisions to the Honest Services and illegal gratuities statutes.

Last year’s Supreme Court decision in Skilling v. United States, 130 S. Ct. 2896 (2010), eliminated an entire category of deceptive, fraudulent and corrupt conduct from the scope of what was known as the Honest Services fraud statute (18 U.S.C. § 1346).  For decades, §1346 was available to prosecute public officials who engage in malfeasance, such as undisclosed self-dealing.  Unfortunately, theSkilling decision effectively struck down as unconstitutionally vague the Honest Services language.  Consequently, there remains a gaping hole in the ability of federal prosecutors to address a vast swath of public corruption.  This revised version the honest services statute is constitutionally sound and heeds the Supreme Court’s directive for more clarity and specificity.

The “Clean Up Government Act” addresses the Court’s concerns about vagueness and lack of clarity by borrowing existing language from 18 U.S.C. § 208, a well-established federal conflict-of-interest statute that already applies to the Executive Branch and that has been upheld as constitutionally sound by the Supreme Court[1] and U.S. Court of Appeals for the Fifth Circuit.[2] Notably, under the proposed statute no public official could be prosecuted unless he or sheknowingly conceals, covers up, or fails to disclose material information – which the official already is already required by law or regulation to disclose – with the specific intent to defraud.  Thus as crafted, H.R. 2572 removes the risk that a public official can be convicted for unwitting conflicts of interest or mistakes.

The legislation also revises the illegal gratuities statute which was eviscerated by the Supreme Court in United States v. Sun-Diamond Growers, 526 U.S. 398 (1999).  The bill makes clear that public officials may not accept gifts given because of their governmental positions.  In addition, responding to United States v. Valdes, 475 F.3d 1319 (D.C. Cir. 2007), the bill makes clear government officials who accept private compensation for using the powers their jobs afford them may be subject to criminal prosecution.

Our organizations applaud Rep. James Sensenbrenner (R-WI) and Rep. Mike Quigley (D-IL) for their bipartisan leadership on this issue.  We urge all committee members to support and pass this critically needed reform legislation to ensure that prosecutors have the tools they need to fight public corruption.

Sincerely,

Campaign Legal Center

Common Cause

Citizens for Responsibility and Ethics in Washington (CREW)

Democracy 21

League of Women Voters

Public Campaign

Public Citizen

U.S. PIRG.

The Campaign Legal Center, together with Democracy 21, filed comments today with the Federal Election Commission (FEC), urging the Commission to reject a request from the Super PAC American Crossroads for permission to fully coordinate campaign ads with candidates despite clear laws prohibiting Super PACs from making expenditures coordinated with candidates.

As the comments filed by the Legal Center and Democracy 21 point out, the American Crossroads request (AOR 2011-23) is absurd in light of the laws passed by Congress and upheld by the courts:

“In short, a political committee seeks the Commission’s permission to ‘fully coordinate[]’ ads with candidates, featuring those candidates, echoing the candidates’ campaign slogans, in ads that are ‘thematically similar’ to the candidates’ own campaign ads, for the purpose of improving voters’ ‘perceptions’ of those candidates in the 2012 election—without treating its payments for such ads as coordinated expenditures under federal law.  Just to recite this request is to demonstrate the absurdity of it.”

“American Crossroads’ request is absurd and flies in the face of decades of Supreme Court decisions upholding laws to prevent political corruption,” said Campaign Legal Center FEC Program Director Paul S. Ryan.  “The Supreme Court has long recognized the importance of contribution limits to preventing corruption, and that expenditures coordinated with candidates must be treated as contributions in order to prevent easy circumvention of the limits.  Most recently, inCitizens United, the Court once again explained that ‘prearrangement and coordination’ presents the ‘danger that expenditures will be given as a quid pro quo for improper commitments from the candidate.’”

Yet the Super PAC American Crossroads urges the FEC to ignore federal statutes and court decisions and, instead, to pretend that its ads intended to improve voters’ perceptions of candidates in the 2012 election, paid for with unlimited contributions from corporations and wealthy individuals, and fully coordinated with the candidates featured in the ads, nevertheless are not “coordinated communications” under the law.

The FEC has been sued twice since passage of the Bipartisan Campaign Reform Act of 2002, by the law’s principal sponsors in the House of Representatives, for the Commission’s failure to enact adequate coordination rules.  In both cases, the courts have struck down the FEC’s rules and ordered the Commission to rewrite them. 

“A green light from the FEC on this request would be an admission by the agency that its own rule defining ‘coordinated communication’ is invalid and that the Commission had failed yet again to promulgate effective rules in compliance with court orders,” said Ryan.

The Campaign Legal Center took the lead in preparing these comments.

To read the comments, click here.