On February 16, 2012, the House of Representatives sent its version of the Stop Trading on Congressional Knowledge Act (the “STOCK Act”) to the Senate for reconciliation. Although it remains to be seen how the two bodies will resolve their differences, the core of the legislation will amend the securities laws to forbid members of the three branches of the federal government and their employees from profiting from insider information. The two versions of the STOCK Act do so by specifying that, for purposes of the securities laws, each covered person “owes a duty arising from a relationship of trust and confidence to the Congress, the United States, government, and the citizens of the United States with respect to material, nonpublic information” derived from such person’s position or gained from the performance of such person’s official responsibilities. Much of the public debate concerning the STOCK Act has centered on this explicit establishment of a duty of trust and confidence, but less attention has focused on the bill’s practical implications for private parties who routinely obtain information from those covered by the new statute.

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