New York, NY – Last week, a federal judge temporarily stopped one of the major provisions of the STOCK Act that would have required federal employees to disclose details about their investment activity from taking effect.
The Judge’s Ruling
US District Judge Alexander Williams Jr. granted a temporary preliminary injunction that prevents one aspect of the STOCK Act – a requirement that almost 28,000 executive branch employees post details of their investment activity on the internet – from being enforced until October 31st. Initially, the law was supposed to take effect on August 31st.
The STOCK Act was originally designed to limit government employees from being able to profit from non-public information they obtained as a result of their jobs. President Obama signed the bill into law in April.
Judge Williams wrote in his decision that the Stop Trading on Congressional Knowledge Act appeared to illegally infringe on federal workers’ right to privacy. The judge’s injunction does not stop members of Congress and their staff from having to disclose their trading activity.
The Rationale for the Suit
The American Civil Liberties Union, representing a group called the Senior Executives Association (SEA) and a bipartisan group of former national security and law enforcement officials, sued to stop implementation of the disclosure provision in the STOCK Act for executive branch employees on the grounds that posting private information about their investment activity would violate their privacy.
They also argued that giving the public unrestricted access to this personal information could potentially make the government vulnerable to security breaches. According to the SEA, the disclosure requirements under the STOCK Act would mean that every public financial disclosure form filed by all career public servants, except those in intelligence agencies, would be posted on a public, easily searchable database.
“This means, quite simply, that the private financial information of tens of thousands of career public employees will be available to everyone — criminal enterprises and foreign interests included” argues the SEA.
The American Foreign Service Association (AFSA) is particularly concerned about the risks providing this information to “foreign interests” would create for members of the foreign services. In a statement, the AFSA explains their concerns.
“Foreign Service personnel often serve in posts where kidnapping for ransom is a real and growing danger. Making personal financial information publicly available provides criminal organizations information that makes it easier to target members of the Foreign Service and their families.”
New Ally for STOCK Act Foes
Recently the various executive branch employee groups pushing to change the STOCK Act may have gained an important ally in Walter Schaub. Shaub is currently the Office of Government Ethics’ (OGE) deputy general counsel, and he was recently nominated by President Obama to run the OGE. The OGE is responsible for implementing the STOCK Act.
At his confirmation hearing last Friday, Shaub explained his views on the STOCK Act disclosure requirements. “If the STOCK Act were changed to provide additional protections for these employees, I would definitely be in favor of that because I think we can strike a balance between privacy and safety and make things publicly available enough to help the public understand the financial motivations and interests of its leaders.”
Next Step for STOCK Act
As a result of Judge Williams’ injunction, Congress has begun discussions to possibly revise the disclosure provision of the STOCK Act to exclude executive branch employees.
Spokespeople for Senator Joseph Lieberman (I-Conn.), one of the sponsors of the STOCK Act, have said the Senator is trying to understand the concerns of those who oppose the disclosure requirement, and “is open to considering possible solutions.”