Pressure is intensifying in Congress as members consider whether to ban themselves from owning and trading individual stocks. From an anti-corruption perspective, this is a no-brainer. Members of Congress have access to confidential information and should not be permitted to profit off this knowledge through individual stock purchases.
And unlike most legislation considered by Congress these days, this issue has bipartisan support.
One issue, however, has emerged as a sticking point: whether the ban should cover spouses as well. The idea that spouses should be excluded from the ban would render the legislation effectively meaningless.
As readers of the FCPA Blog know, in order for an “anti-corruption” law to be effective, it must prohibit both direct and indirect forms of illicit activity. In other words, if I can’t do something myself, I certainly can’t do it through someone else. The U.S. Code is replete with examples of “indirect” prohibitions (see, e.g., here and here). Moreover, as Professor Karen Woody has pointed out, we even have existing templates in federal securities law.
The fact that members of Congress are considering exempting spouses from the legislation’s coverage is as cynical as it is disappointing. It would enable members of Congress to claim they are “tough on corruption” while still empowering them to funnel trades through their spouses.
It’s well past time for Congress to get serious about eliminating this brazen conflict of interest. But if they are going to pass this legislation, it must cover spouses as well. Anything short of this would be window dressing and, frankly, worse than having nothing at all.