Regulatory Focus™ > News Articles > New Law Rolls Back Provisions Requiring Top Regulators to Make Public Their Finances

New Law Rolls Back Provisions Requiring Top Regulators to Make Public Their Finances

Posted 16 April 2013 | By

Top US regulatory officials may well be breathing a sigh of relief this week as at first legislators, and then finally the president, moved to pass a measure into law that would roll back new requirements that would have required them to make public their financial records, raising the prospect that some officials might be subject to identity theft or other crimes.

Background

The law, known as the Stop Trading on Congressional Knowledge (STOCK) Act, was passed in March 2012 in response to news reports that some members of Congress and their staff were using insider, privileged information-pending legislation, information provided in advance of a hearing, or other private government information-to trade stocks and gain monetarily.

This, noted investigators, was perfectly legal. In the ensuing uproar, Congress moved to fix the loophole that some of its members had allegedly been exploiting. But in traditional congressional fashion, another group found itself looped into the same legislation: Senior members of the federal bureaucracy, which some estimates found to number in the tens of thousands.

While FDA officials subject to congressional approval are already required to make public financial disclosures-you can find FDA Commissioner Margaret Hamburg's online, for example-the same standard isn't currently applied to other senior officials, such as center directors like Janet Woodcock, Jeffery Shuren, and Karen Midthun. Other senior officials, too, would likely have been affected.

Troubling Provisions

The law faced a number of setbacks since being implemented. In September 2013, the law was temporarily blocked by US District Court Judge Alexander Williams, who noted his concerns that the law violated federal workers' right to privacy by requiring them to disclose their bank, retirement, stock and other asset holdings.

Some scientific advocacy groups, meanwhile, launched a campaign aimed at stopping the measure, arguing that it would hinder the ability of scientific agencies like FDA to hire competent staff, particularly those with significant holdings or those who valued their privacy. Another recurring source of concern was the potential for the public information to be used to blackmail or otherwise pressure officials.

While these concerns were focused more on the national security side of government, speculations included one that a company facing an adverse approval decision from FDA might comb through disclosure files to try and find a piece of information that could be used to pressure someone into approving an otherwise borderline or unapprovable application.

"We believe that this indiscriminate disclosure puts filers at the mercy of anyone who wishes to harm or defraud us or our families," read a letter from the Assembly of Scientists, an advocacy group. "Many senior employees, faced with diminished privacy rights, are discussing leaving the government for the private sector. Colleagues at universities are concerned and less likely to accept positions at national laboratories, thereby putting US institutions at a disadvantage in recruiting and retaining the nation's most prominent and creative scientists."

STOCK Stopped

Those concerns, and notably those related to national security, received the attention of legislators, who voted to delay the transparency measure by six months.

With the clock winding down on that delay window, legislators last week voted to entirely dismantle the STOCK Act, saying they would re-draft a similar piece of legislation that took into account concerns raised by outside groups.

A statement by President Barack Obama's press secretary, Jar Carney, explains that the law would eliminate the requirements that Executive Branch employees "make available on official websites their financial disclosure forms." That leaves existing requirements, such as those on Hamburg, in place.

Some government worker advocacy groups praised the decision. "In the interest of ensuring that government works effectively, which includes safeguarding employees' sensitive information, this was the right decision," Senior Executives Association President Carol Bonosaro said in statement.


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