Senator Al Franken (D-Minn) introduced the End Congressional Stock Market Abuse Act of 2017 in response to recent Trump Administration confirmation hearings that surfaced allegations that a member of Congress may have obtained discounts or premiums in stock transactions. The Senator said in a press release that his bill (S. 350) would restrict the ability of members of Congress to obtain special pricing of securities in private offerings.
Closing an Exchange Act gap. The Franken bill would update Exchange Act Section 21A to prohibit members of Congress from buying or selling shares of covered securities that have price discounts or premiums. But a member of Congress could invoke an exception to the prohibition if he reasonably believes the discount or premium "was obtained in a manner generally available to the public."
For purposes of the bill, "covered security" includes securities registered on U.S. or overseas exchanges, plus synthetic interests that involve derivatives or short sales. "Price" refers to the national best offer or bid as defined in Rule 600 of the SEC’s Regulation NMS.
Discounted shares. According to Sen. Franken, who is a member of the Senate Health Committee that vetted former Rep. Thomas Price, M.D. (R-Ga) before Price was confirmed as Secretary of Health and Human Services, Price may have received favorable pricing on at least one stock deal. Price, an orthopedic surgeon, was sworn-in nearly two weeks ago, and will play a key role in the Trump Administration’s plan to repeal and replace the Affordable Care Act.
During his confirmation hearing, Senators raised questions about Price’s $200,000 profit (a 400 percent return) on an investment Price was able to make in the Australian company Innate Immunotherapeutics. The senators said Price allegedly had participated in the transaction along with a small group of investors who received discounted offerings of shares.
In January, a group of Democratic and Independent Senators wrote to the SEC requesting an investigation of Price’s stock deal, citing the Stop Trading on Congressional Knowledge (STOCK) Act of 2012; Rep. Louise Slaughter (D-NY) made a similar request. Senator Franken also had tried to delay Price’s confirmation pending further investigation into Price’s trades.
Companies: Innate Immunotherapeutics
MainStory: TopStory Enforcement ExchangesMarketRegulation FraudManipulation TrumpAdministrationNews
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