WASHINGTON ― When President-elect Donald Trump takes office on Jan. 20, he will be banned from using nonpublic information for private profit under the 2012 STOCK Act, the Office of Government Ethics said in a letter clarifying the law’s interpretation.
The letter from OGE Director Walter Shaub released Thursday night expanded on an earlier letter to Sen. Tom Carper (D-Del.) to make it clear Shaub’s official guidance is that the STOCK Act does apply to the president.
“The STOCK Act bars the President, the Vice President, and all executive branch employees from: using nonpublic information for private profit; engaging in insider trading; or intentionally influencing an employment decision or practice of a private entity solely on the basis of partisan political affiliation,” Shaub’s letter reads.
The guidance further states the STOCK Act prohibits the president and vice president from participating in an initial public offering and participating in any action that could benefit or influence any person with whom they may be negotiating future employment or compensation after leaving office.
This official guidance was necessary because OGE had not issued the guidance formally declaring how the law applied to the president and vice president, as it was required to in a section of the law. The Huffington Post reported on this oversight Tuesday.
This law could cause significant problems for Trump, who appears ready to continue to hold a stake in his multibillion-dollar business enterprise. He has hinted that he will hand off control of the company to his two oldest sons, Donald Jr. and Eric Trump. If at any time he gives them profitable information that he has learned through his presidential duties and that has not been disclosed to the public, he would be committing a felony.
In earlier guidance on the STOCK Act, OGE gave examples of what violating the prohibition would look like. The most relevant example for Trump involved an Army Corps of Engineers employee who also belonged to an environmental organization. This person would be banned from giving nonpublic information about the construction of a dam to a member of the environmental organization or to a reporter.
The STOCK Act was passed with bipartisan support in 2012 amid concerns that members of Congress were using information they had gained in the course of their work to trade stocks ― a form of insider trading, essentially. While the legislation initially applied only to members of Congress, Republicans insisted the law apply to the legislative and executive branches. They wanted to make sure that the law covered Democratic President Barack Obama.
There are already efforts among congressional Democrats to increase their understanding of how this 2012 law could effect President-elect Trump. Rep. Louise Slaughter (D-N.Y.), who was a sponsor of similar legislation before its passage, told Politico that her staff was meeting with experts to study the bill.
At a forum held by Rep. Elijah Cummings (D-Md.), the ranking member on the House Oversight and Government Reform Committee, to talk to ethics experts about Trump’s conflicts of interest, Rep. John Sarbanes (D-Md.) asked whether they believed that the STOCK Act applied to the president. Both Richard Painter, ethics advisor to former President George W. Bush, and Norm Eisen, ethics advisor to Obama, agreed that it did.
“It does,” Painter said. “As does the insider trading law that existed before the STOCK Act was enacted. I am concerned about the tipping off of people.”