The STOCK Act Faces New Hurdles

On Aug. 2, the American Civil Liberties Union (ACLU) filed a lawsuit and an injunction against the Office of Government Ethics (OGE), challenging the constitutionality of the Stop Trading on Congressional Knowledge Act (STOCK Act). The ACLU is suing on behalf of seven high-level federal government employees and four organizations representing them. The ACLU claims that posting officials’ financial information online violates their privacy in addition to potentially threatening their physical safety. On the basis of similar concerns, Congress passed a bill delaying implementation of the STOCK Act.


Congress passed the STOCK Act in March, and the legislation was quickly signed into law by President Obama in April. Although several existing laws required public officials to disclose personal finance information, the STOCK Act brought those disclosures under a common legal standard and significantly expanded the number of officials whose reports were to be posted online. Such asset disclosure helps ensure that public officials cannot abuse their positions for personal gain by identifying and addressing conflicts of interest these officials may have before they act on insider information.

The STOCK Act would affect some 28,000 executive branch employees, including civilian, military, and diplomatic personnel, as well as their spouses and dependent children. The data would reveal, among other things, employees’ ownership of stocks and bonds, investment income, business interest, and non-investment income such as salary and retirement benefits. Opponents of the law say putting this information online will expose these officials to harassment, identity theft, financial fraud, blackmail, bribery, and hacking and could threaten their personal security.

ACLU Lawsuit

In its lawsuit, the ACLU makes three arguments against the law and asks for an injunction against implementation until the suit is resolved. First, the organization claims that Walls v. City of Petersburg (Fourth U.S. Circuit Court of Appeals, 1990) established two conditions that must be met to allow disclosure of a person’s private information: a compelling governmental interest that outweighs the individual’s privacy interest and robust safeguards against dissemination of the information. In Walls, the Fourth Circuit found that a public official’s privacy had not been violated because her financial information had governmental value in preventing corruption (compelling interest) and was locked in a private filing cabinet, to which few officials had access (robust safeguards). The court stated, "If this type of information had been more widely distributed, our conclusions might have been different." The ACLU argues that there are no robust safeguards in place when the dissemination of financial data is online, and therefore, the STOCK Act requirement to post officials’ information violates the First Amendment and constitutes an unreasonable invasion of privacy.

Second, the ACLU argues that the asset disclosure forms submitted prior to the passage of the STOCK Act explicitly stated the provided information would be subject to Privacy Act protections. Under the Ethics in Government Act of 1978, top federal employees have filed a financial disclosure form, OGE Form 278, with their agencies' ethics officials. The Ethics in Government Act also established a process for the public to request the financial disclosure forms of government officials, but only if they identified themselves in writing and acknowledged that they wouldn’t misuse the information. The formal requests for review were also public. The ACLU also argued that barring the formal request process, the financial information provided by officials was covered by the Privacy Act and cannot be disclosed by agencies without the written consent of the submitters. The ACLU concludes that since the STOCK Act instructs agencies to post previously filed financial forms, it violates the filers’ due process rights under the Fifth Amendment.

Third, the ACLU argues the STOCK Act cannot be implemented under the Administrative Procedure Act (APA), the codified guidelines for implementing laws. The organization notes that the APA prohibits agency actions that are "contrary to constitutional right, power, privilege, or immunity." They reason that if their two previous points are correct (i.e., the law violates the First and Fifth Amendments), the STOCK Act cannot be implemented under the APA.

Attorney Jack McKay, a member of the law firm that is co-counsel with the ACLU in the lawsuit, said, "The reach of this law and its consequences are unprecedented…. The consequences for personal privacy and national security are extraordinary." Echoing these sentiments, Arthur Spitzer, legal director of the Washington, DC ACLU, said, "This is like putting your tax returns on the Internet for everyone to see. Think about what that would mean to you. It’s a privacy disaster, and it’s compounded by the risk to employees’ safety and to our national security."

The ACLU filings do not address the fact that these financial disclosures are already publicly available upon request and that once the data is released, third parties may post this information online. In fact, some groups, such as the Center for Responsive Politics, are already posting financial disclosure data online related to members of Congress and presidential candidates.

Additionally, a number of states have already established some level of online access to public officials' financial information, including Arkansas, Rhode Island, and Tennessee. A recent OMB Watch report examined accountability websites in the states, including asset disclosure information, and found several of them very functional and broad in scope, even if they wouldn’t have the same level of detail and searchability that the STOCK Act requires on the federal level. The states appear to have been posting financial disclosure data for many public officials for several years without any apparent privacy or personal safety problems that the ACLU claims would result from federal disclosure.

Congress Delays Implementation

On Aug. 2, citing concerns about privacy and personal safety similar to those raised by the ACLU in its court filing, Congress quickly passed a bill (S. 3510) delaying the effective date of the online financial disclosure requirement one month, from Aug. 31 to Sept. 30. The two-page bill also amends the STOCK Act to close a reporting loophole for House officials. All other provisions of the STOCK Act remain in effect. Legislators in both the House and Senate passed the legislation the same day it was introduced to provide additional time to consider steps "to prevent harm to the national security or endangering the military officers and civilian employees."

The bill makes explicit the requirement for periodic reporting of certain financial transactions of House members’ spouses and dependent children. This means that lawmakers, spouses, and dependents will have to file a report detailing the sale or purchase of stocks, bonds, and other financial assets. These reports must be filed within 30 to 45 days of the transaction taking place. Previously, depending on how the House and Senate Ethics Committees interpreted the law, only senators would have had to comply with this requirement.

back to Blog