In the ever-changing world of corporate political law regulation, one of the new kids on the block is the Stop Trading on Congressional Knowledge Act of 2012 (“STOCK Act”).  This new law was intended to apply criminal insider trading laws to trading on material, non-public information obtained from Congress, the executive branch, or the judiciary.  As the stock market surges today (as of this writing), based on reports that a resolution of the budget impasse and government shutdown might be near, we can’t help but think about the STOCK Act implications.

Washington is awash right now with lobbyists and consultants who are trying to divine when a deal will be struck, and what it will look like.  Most of what they will learn is speculative, and very little of it will be “actionable” intelligence that could be used as the basis for trading in the financial markets.  There is nothing illegal about punditry.  In theory, though, it is possible that someone in-the-know on the Hill, or in the executive branch, could leak very specific information about an imminent budget deal, or the terms of such a deal, to a trader.  Private access to that sort of very material information could be used to make a quick profit on the markets. The line that defines what would constitute material, non-public information, in the context of governmental information, is very fuzzy.  The STOCK Act is so new that there is little available guidance from the SEC or from case law.

We recently published an article in Wall Street Lawyer that describes the STOCK Act and some of its implications for those who gather information from the government that could be used for trading purposes.   Previously, we posted a client advisory summarizing the STOCK Act’s key provisions and providing some practical advice for complying with it.  We also recently posted a client advisory addressing the first signs of enforcement activity concerning the STOCK Act.  Covington has a unique, cross-disciplinary team of political lawyers and securities lawyers who advise clients on STOCK Act compliance programs and enforcement matters.  Such advice is in high demand at the moment.

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Photo of Robert Kelner Robert Kelner

Robert Kelner is the chair of Covington’s Election and Political Law Practice Group. Mr. Kelner provides political law compliance advice to a wide range of corporate and political clients.  His compliance practice focuses on federal and state campaign finance, lobbying disclosure, pay to…

Robert Kelner is the chair of Covington’s Election and Political Law Practice Group. Mr. Kelner provides political law compliance advice to a wide range of corporate and political clients.  His compliance practice focuses on federal and state campaign finance, lobbying disclosure, pay to play, and government ethics laws, as well as legal ethics rules.  His expertise includes the Federal Election Campaign Act, Lobbying Disclosure Act, Ethics in Government Act, Foreign Agents Registration Act, and Foreign Corrupt Practices Act.  He is also a leading authority on the arcane rules governing political contributions by municipal securities dealers, investment advisers, hedge funds, and private equity funds.  Mr. Kelner advises Presidential political appointees on the complex process of being vetted and confirmed for such appointments.

In addition, he regularly advises corporations and corporate executives on instituting political law compliance programs.  He conducts compliance training for senior corporate executives and lobbyists.  He has extensive experience conducting corporate internal investigations concerning campaign finance and lobbying law compliance, as well as other corporate compliance matters.  Mr. Kelner regularly defends clients in investigations by the Federal Election Commission, the U.S. Department of Justice, the U.S. House & Senate Ethics Committees, the House Oversight & Government Reform Committee, the House & Senate Judiciary Committees, the House Energy & Commerce Committee and its Subcommittee on Oversight & Investigations, the Senate Finance Committee, the Senate Special Committee on Aging, the Senate Permanent Subcommittee on Investigations, the Senate Health, Education, Labor, and Pensions Committee, and other congressional committees.  He has prepared numerous CEOs and corporate executives for testimony before congressional investigation panels, and he regularly leads the Practicing Law Institute’s training program on congressional investigations for in-house lawyers.  He also defends clients in Lobbying Disclosure Act audits by the GAO and enforcement actions and audits by state election and lobbying enforcement agencies.

Mr. Kelner has appeared as a commentator on political law matters on The PBS News Hour, CNBC, Fox News, and NPR, and he has been quoted in the New York Times, Washington Post, Wall Street Journal, Legal Times, Washington Times, Roll Call, The Hill, Politico, USA Today, Financial Times, and other publications.