A majority of members in both chambers of Congress stymied the efforts of a handful of legislators to make a much tougher law that would have done more to restrict how government officials can profit from non-public information learned on the job.
"This is bipartisanship, but it's not the kind of bipartisanship, cooperation, intended or not, that this nation deserves," said Sen. Chuck Grassley, R-IA, during in a 20-minute floor speech before the vote. "Today's actions only serve the desires of obscure and powerful Wall Street interests."
Grassley was among the few to vote against the bill, which passed 96-3.
The Senate passed the House version of the bill unaltered. Back in February both chambers passed different versions of the bill, with the Senate version having the stricter provisions.
But Senate Majority Leader Harry Reid, D-NV, opted to vote on the weaker House version of the bill instead of sending the bill to a conference committee.
The new law will have some effect, albeit a minimal one.
The House voted 417-2 to approve the STOCK Act; the Senate vote last week was 96-3.
You'd think that lawmakers wouldn't need prodding to obey laws that apply to everyone else, but their behavior has said otherwise.
By the legislators' own admission, an insider trading law shouldn't even be necessary.
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The Senate will hold a procedural vote today (Monday) on a bill that prohibits Congress members from using nonpublic information to make stock transactions - known as "insider trading" when conducted by corporate insiders. Today's vote could put a time limit on passing the bill, which the Senate will continue debating this week.
Congress has faced increasing backlash lately for its growing list of financial advantages over the Americans it represents. A CBS News' "60 Minutes" program in November 2011 exposed Congress insider trading - elected representatives trading stocks related to hot topics being debated in Congress before information had been disclosed to the public.
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That's helped many hedge fund managers make the same sort of lucrative bets in the stock market that has enriched members of Congress.
Meanwhile, Congress isn't doing anything to help individual investors, who don't have access to insider information and would probably be fined or jailed for doing what their representatives have been doing for decades.
"We the people need a new bill of rights from Congress," said Money Morning Capital Waves Strategist Shah Gilani. "I'm talking about our rights to control their indiscretions, lies, cronyism and the actions they take under cover of the protections of their offices."
Washington's latest transgression was revealed Tuesday in The Wall Street Journal.
New York-based broker-dealer JNK Securities Corp. arranges about 12 meetings a month between legislators and hedge fund managers.
If the information discussed turns into a useful stock tip, the hedge fund must execute the trade with JNK so it can earn a commission. But as questionable as it all sounds, no one is breaking any laws.
It boils down to "buying information from members of Congress in a perfectly legal way," Richard Painter, a former ethics lawyer for President George W. Bush and currently a law professor at the University of Minnesota, told The Wall Street Journal.
Greed, Corruption and LiesIn one instance, Conatus Capital Management scooped up 300,000 shares of Visa Inc. (NYSE: V) in the first quarter of 2010, knowing that a key provision harmful to the major credit card companies would not be included in the Dodd-Frank legislation. That tip came from a meeting with bill co-author Sen. Christopher Dodd, D-CT.
"Hedge funds and other investors have found that Washington can be a gold mine of market-moving information, easily gathered by those who are politically connected," Sanford Bragg, CEO and President of Integrity Research Associates, told The Wall Street Journal.
Both Republicans and Democrats defended the practice, telling The Journal that the discussions with hedge fund managers help them shape legislation.
Clearly, Congress can't be trusted with market-sensitive information. And if you think the revelations in The Journal or the CBS News "60 Minutes" expose on insider trading in November will slow them down, think again.
They have too much incentive to maintain the status quo.
A study by the academic journal Business and Politics shows that over the long term, members of Congress beat the market by an average of 9% annually.