RiskPicksWhat is the STOCK Act?
The STOCK Act (Stop Trading on Congressional Knowledge Act) is a federal law passed in 2012 that explicitly bans members of Congress, their staff, and other federal employees from using non-public information gained through their official duties for personal financial gain. It also requires timely public disclosure of stock trades.
Key requirements
- Disclosure within 45 days: members of the House and Senate must file periodic transaction reports (PTRs) within 45 days of any stock trade exceeding ,000.
- Public filings: all PTRs are public record. House filings go to the Clerk of the House. Senate filings go to the Secretary of the Senate.
- No insider trading: Congress members are explicitly subject to insider trading laws, which was ambiguous before the STOCK Act.
- Amount brackets: the exact dollar amount of each trade is not disclosed. Instead, trades are reported in brackets (e.g. ",001 - ,000" or ",001 - ,000").
Why traders track congressional trades
Members of Congress sit on committees that oversee industries, approve regulations, and receive classified briefings. While the STOCK Act prohibits trading on this information, the disclosure data shows patterns that are worth watching:
- A senator on the Armed Services Committee buying defense stocks before a spending bill.
- A representative on the Health Committee selling pharma stocks before an FDA decision.
- Cluster buying: when multiple members from different parties buy the same stock around the same time.
Academic studies have found that congressional stock portfolios have historically outperformed the market, though the gap has narrowed since the STOCK Act's passage.
Limitations
The 45-day disclosure window means the data is delayed. By the time a trade is public, the catalyst may have already played out. Also, many trades are made by spouses or through financial advisors, so the member may not have direct knowledge of every transaction.
RiskPicks and the STOCK Act
RiskPicks tracks every STOCK Act disclosure from both the House and Senate, updated daily before market open. The data is available on the /congress page and is fed directly into the AI Sentiment analysis. When you look up a stock, the AI knows if any members of Congress have recently bought or sold it.