Senator Scott Brown seeks to impose insider-trading rules on Congress

By Bobby Caina Calvan, Globe Staff

WASHINGTON -- Senator Scott Brown of Massachusetts introduced legislation today that would bar congressional employees from using inside knowledge that could help fatten their investment portfolios.

“Members of Congress should live under the same laws as everyone else,” Brown said today. “If they trade on inside knowledge to line their own pockets, they should be punished.”

An expose on the issue aired Sunday on the CBS news program “60 Minutes.”

According to the program, “most former congressmen and senators manage to leave Washington -- if they ever leave Washington -- with more money in their pockets than they had when they arrived.”

The news magazine said some elected officials could be profiting from their access to information that could have profound effects on the stock market.

According to Brown’s office, Congress is among the few federal institutions, including the Supreme Court, that don’t prohibit their employees from using information they obtain from their jobs to guide their investment decisions.

Brown’s office cited a study by economist Alan J. Ziobrowski, who it said analyzed the common stock investment portfolios, between 1993 and 1998, of US senators. The study showed that the senators, on average, beat the market by 12 percent a year -- double the percentage earnings of corporate insiders investing in their own company’s stock, the senator’s office said. In comparison, most US households performed 1.4 percent below the market on average.

Brown’s proposal, dubbed the “Stop Trading on Congressional Knowledge Act,” would require members of Congress and congressional employees to report within 90 days purchases, sales or exchanges of stocks, bonds or other commodities futures greater than $1,000.

Penalties would be decided by the Securities and Exchange Commission.

Similar legislation, H.R. 1148, was introduced in the House but is currently in limbo. Rep. Niki Tsongas is a cosponsor.