Blow the Whistle!: How the SEC Whistleblower Program Will Prevent Congressional Insider Trading

In 2012, Congress passed the Stop Trading on Congressional Knowledge Act in hopes that it would prevent members of Congress from trading financial securities based on sensitive information entrusted to their governmental positions. Nonetheless, as COVID-19 revealed, the legislation does not work, and many members of Congress continue to benefit financially from congressional knowledge. Under pressure from the media and public, Congress has since proposed new legislation requiring members to place their investments into a blind trust. However, as this Article will reveal, blind trusts are not exactly “blind” and the legislation appears to contain many loopholes. Moreover, there is certainly the concern that United States Representatives are not thrilled at the idea of making more rules themselves. The current and proposed legislation does not prevent congressional insider trading. Therefore, implementing the SEC whistleblower program will allow the SEC, an independent agency, to prosecute congressional insiders and prevent insider trading within Congress.First, this Article analyzes congressional insider trading before and after the adoption of the STOCK Act and shows that the issue has persisted despite its passage. Second, the discussion will reveal the SEC whistleblower program’s strengths and weaknesses and persuade readers of the factors that will make the program successful within Congress. The third part will break down the STOCK Act and the proposed Ban Congressional Trading Act and reveal why these are not viable options to prevent congressional insider trading. Finally, this Article will discuss the public policy rationale behind implementing the SEC whistleblower program, highlighting the public’s portrayal of Congress and how the SEC being an independent agency, will increase accountability amongst members of Congress.