President-elect Donald Trump insists he can do all the business deals he wants while serving in the White House, but a 2012 law barring insider trading by government officials could make doing so a lot more complicated.
The Stop Trading on Congressional Knowledge — STOCK — Act bars members of Congress and their staffs from buying and selling securities based on inside information. The U.S. Office of Government Ethics recently said the law also covers executive branch employees, including the president and vice president.
Some government ethics experts argue that the law should also apply to Trump and his family's network of businesses.
"If he continues to own his businesses and he uses insider information, or information he has as president, then arguably it's a violation of the STOCK Act," says Larry Noble, general counsel of the Campaign Legal Center, a nonpartisan advocacy group.
Trump has repeatedly said that he plans to turn over management of his businesses to his grown children once he is in the White House and play no role in operations himself.
Trump has often said he has no plans to do deals in the White House, though he also adds that no law prevents him from doing so.
Under the Ethics in Government Act, most government employees are barred from participating in decision-making that affects them financially, but the law exempts presidents and vice presidents.
"You know, under the law I have the right to do it. I just don't want to do it. I don't want to do deals," he said in a Dec. 11 interview with Fox News Sunday.
But there are no such exemptions under the STOCK Act.
"The STOCK Act says all executive branch employees are subject to the securities laws, Trump included," says New York University Law School professor Stephen Gillers.
"The purpose of the STOCK Act was to restore people's trust in our government, because I had learned, along with the rest of America, that apparently members of Congress were not banned from insider trading, like every other American citizen," said the bill's lead author, Democratic Sen. Kirsten Gillibrand of New York, in an interview with NPR:
"If you know anything about members of Congress and the executive branch, senior members, they have a lot of inside information. They have a lot of nonpublic information. For example, they know if a law is going to be renewed or enforced or broadened. They know if some kind of company is going to be highlighted for bad behavior. They know this in advance. So if they were able to buy or sell stock based on that nonpublic information, they could really make a lot of money."
The STOCK Act originally applied to the buying and selling of securities, such as stocks and bonds. But some legal experts say privately held companies such as the Trump Organization could also fall under its purview, especially if Trump transfers ownership to his children.
Because presidents are privy to an enormous amount of information that could affect stock prices, Trump would risk passing on inside information anytime he talks to his children, even if he doesn't intend to. That could open Trump, his children and businesses up to nearly constant allegations of insider trading.
"I think it can create tremendous problems for a president that has a lot of financial and business interests that either he's actively involved with or knows about, or his family's actively involved with," says Noble of the Campaign Legal Center.
RACHEL MARTIN, HOST:
President-elect Donald Trump has promised to reveal next month what he plans to do with his vast network of businesses and how he'll address the inevitable conflicts of interest. It's not just an ethical issue. If Trump continues to do deals while in office, it could pose some unusual legal problems. One law he'll have to contend with is called the STOCK Act. It bars presidents from buying and selling securities based on inside information. NPR's Jim Zarroli reports.
JIM ZARROLI, BYLINE: Federal law says if you're in the Cabinet or work for the White House, you aren't allowed to have a conflict of interest. You can't be involved in decisions in which you have a financial stake. But as Donald Trump has frequently pointed out, that law doesn't apply to the president. Trump told "Fox News Sunday" this month that once he's in the White House, he's free to do all the deals he wants.
(SOUNDBITE OF TV SHOW, "FOX NEWS SUNDAY")
DONALD TRUMP: I have the right to do it. You know, under the law, I have the right to do it. I just don't want to do it.
ZARROLI: But there's another law passed in 2012 that could make it harder for Trump and his family to run their businesses. It's called the Stop Trading on Congressional Knowledge, or STOCK, Act. The bill's lead author, Democratic Senator Kirsten Gillibrand of New York, says members of Congress have access to a lot of inside information.
KIRSTEN GILLIBRAND: They know if a law's going to be renewed or enforced or broadened. They know if some kind of company's going to be highlighted for bad behaviors. And so if they were able to buy or sell stocks based on that nonpublic information, they could really make a lot of money.
ZARROLI: The STOCK Act bars government officials from buying or selling securities based on inside information. And the Office of Government Ethics recently said the law applies to all executive branch employees, including the president. Larry Noble is an attorney with a nonpartisan advocacy group, The Campaign Legal Center.
LARRY NOBLE: If he continues to own his businesses and he uses insider information or information he has as president, then arguably it's a violation of the STOCK Act.
ZARROLI: Let's say a president owns shares in a defense company and then approves a big increase in military spending. That may be unseemly, but it's not illegal. But if a president rushes out to buy shares in a defense company after learning that it's about to get a big Pentagon contract, that's insider trading. And since presidents hear inside information all the time, Trump could constantly open himself up to potential insider trading allegations.
NOBLE: I think it can create tremendous problems for a president that has a lot of financial and business interests, that he's - either he's actively involved with or knows about or his family's actively involved with.
ZARROLI: Noble says the law applies to his children as well. And that's important because Trump has frequently said he wants to turn over management of his companies to his two older sons. If he does, a lot of the decisions they make will come under a level of scrutiny they've never faced before. And under the STOCK Act, those decisions could pose big legal problems as well. Jim Zarroli, NPR News, New York. Transcript provided by NPR, Copyright NPR.