contracts. we seek expert advice on public policy in order to reach the right decision. i'm thinking of how many of us during the financial crisis during the fall of 2008 reached out to financial experts for advice. i think this is a more complicated issue than it first appears to make sure that when we do act, that we're not having a chilling impact on the responsibilities of members of congress to their constituents. .

the member does not make the trade or blind trust would be another opportunity for those who have enough assets to have blind trust. what if we come at it from that perspective? what would be your opinion?

>> i think the kind of 10b plan is a kind of protection. many congressmen would find it in a position if they were told they had to use a blind trust even when they had no information at all. they might do this as a matter of pure precaution but i think they would find it unnecessary regulation to say you cannot trade it all because you're a congressman. if you recognize that you were going to come in contact with material information, you would be well advised to use a 10b plan. their reason you are using it is it might be criminal if you traded in your own name. these two things fit together for you have a prohibition and safe harbors. the safe harbor would be a 10b plan or advisement of counsel. i think you need both of them together. >> does everyone -- does anyone

disagree? >> you mentioned at the outset of your question the possibility of moving members of congress away from single stocks to other forms of financial instruments. that is very difficult because we have discovered insider- trading is possible with nearly every form of financial instrument including mutual funds. with respect to 10b-1, is important to know that is simply a role in congress would have to face up to that if they were to go that route that says as long as you execute the instructions at a time you did not present -- possessed none material information, the fact the trade was executed at u.k. meant to position of such information does not make reliable. this simply moved the time where we're looking at what the person

knew and when did they know it. that does not make that many hard issues go away. >> professor nagy, i want to get to a different issue so if you could answer that quickly. >> i think blind trusts they will be an effective solution to much of the difficulty here. i will leave it at that, thank you very >> you are right, blind trusts are a mechanism called for people who have substantial assets because there are administrative costs. they are only blind insofar as -- they are not blind as to what you put into them. their only blind if you are putting in cash or if the assets have been sold down to a particular level. you are notified you don't have those anymore but they are not blind as to which to put into them. as too limiting members and

staff, i think you would be making it harder to attract the best and brightest are even the pretty good and a fairly smart. >> i will try not to be offended by that. as a person with no assets who could never qualify for a blind trust. >i understand. professor nagy, you testified that you feel confident that congressional insider trading is already illegal under existing laws. even if you are correct, is there an advantage to congress making it crystal clear by passing such a law? i realize we have to be careful how we drafted.

>> this could be cured by careful drafting. one risk i would fear is budget legislating directly, that would be taken as an indication that the stock act is the only insider trading law that would apply to members of congress. that can be cured by a statement that says the stock act builds on existing law and the stock act would come on top. i think the potential risk could be solved easily and i would be happy to help in that effort. there is another risk that i think we should think through. that comes from public perception as well. as i mentioned, the controversy

surrounding the application of the federal securities law to members of congress stems from the fact that congress has never enacted and express statutory prohibition of insider trading for anybody. everybody else has to navigate through what has often been described as the maze of decisions. the boy friend has to decide if he can trade on information based on whether he owes a duty of trust and confidence. sometimes that might be hopelessly confusing. what i could see potentially happening with an express statutory prohibition applying to congress and federal employees is when all the dust settles from all of this, everyday ordinary people say why do they get the express' prohibition and we have to

suffer through the maze of what it means to defraud in connection with the purchaser? that is a risk that might not be on the table now but potentially could be. >> a valid point -- for the next round for the record, the question i want you to think of is whether we should have a lot, if we are going to venture into this area, that applies to the executive branch as well. i think a treasury secretary has access to far more confidential non-public information and any member of congress. >> in order of appearance, will go to senator brown. >> thank you. i appreciate the examples about boyfriends and girlfriends and

relationships. we are talking specifically about members of congress -- if i am in a top-secret meeting and i find we're going to drop a weapons system and by doing that the company's stock will go down dramatically and i walk outside and pick up the phone and i say to sell company stock, that is what we're talking about. we are talking specifically about real time real-world situations that have been brought to our attention. i went to law school, too. it reminds me of a law school class and i want to do something. you indicated that the courts still of not decided what to do. if not now, when? that is why we are here. that is why the chairman and ranking member ask for this important hearing. i want to go to ms. sloan who

has been left out of all the fun. if you look at this type of situation, would you think it would be a good idea in our ethics disclosures to be more specific as to maybe a more periodic update as to the stocks we own and trade and when we bought them and when we sold them and the exact amount of moneys we purchased and sold for? that way anybody who is in the media or whomever can look at it and say that senator so and so is on the armed services committee and he or she bought x amount of military arms stocks. they found out that company -- that contract was going to be terminated. that would be the initial information to say there is an

issue we need to look into. is that a good suggestion? >> i think disclosure is a great way to go because i think there are repercussions if you have quick disclosure. i think 90 days is far too long. there will the people look at this kind of trade very frequently especially if this searchable in an electronic data base. you gave the example of where you learn something in a committee and go out and make a call. that is exactly the kind of, the , but that is difficult to prosecute because it is something you learned in a legislative committee set no prosecutor would be able to use that information that you obtained this in a committee to obtain an indictment or at trial. is a tricky situation. >> that is why we are here. the fiduciary responsibility is to the american people. that is the relationship we have.

the supreme court has articulated a severely restrained approach to applying the insider-trading laws saying it is within the power of congress not to expend a role 10b. if we choose to do nothing today, wouldn't congress be sending a pretty strong message to the supreme court that we do not want to clearly articulate holding members of congress liable for this kind of insider information? >> you are absolutely right. the supreme court admittedly has said repeatedly it is the job of congress to push on the statute, to expand it, not the court's job in the absence of clarity. that is the language that worries me the most in terms of a court coming out the other way. i think you can accomplish a lot by that explicit statement. >> thank you. in order to rebuild america's

trust in congress, in your opinion, no members of congress have been successfully prosecuted for insider trading -- would strengthening the senate ethics rules be a good deterrent and rebuild the confidence that members are held to the stand -- same standards as everybody else? >> no, i think people have very little confidence in the ethics committee in the senate. they have done a lousy job and a last few years and they rarely hold members' feet to the fire. there have been many complaints that we don't get responses for three years later. i would say that is not a solution. i think you need a dual solution. you need to have a clear prohibition and ability of prosecutors to go after you. >> prof. coffee, the sec in the case they have all the tools they need but we have not seen

any prosecution of any members of congress or staff for insider trading. the sec recently lost a string of insider-trading cases, why wouldn't they want a legal standard that without a doubt creates a crystal clear framework for the sec to prosecute members and staff who trade on material non-public information? >> i think we agree with you the congress should legislate. we're talking about weeks in what the language should be. >> if the existing senate ethics tools provide a framework as you have indicated, why haven't we seen any prosecutions? >> first of all, i want to say that there is the zebrowski study that says insider-trading is somehow a endemic in congress. there is another study that says

otherwise. it says that members portfolios perform below the mark. when you look at the average member's portfolio, they do not exceed the market and they do not meet market performance. i think the question of why there haven't been prosecutions is based on the premise that somehow this is happening everywhere another aspect of the answer is the ethics committees do not have an audit function for it they don't go from office to office to investigate what people are doing that has not otherwise been recorded either through a complaint or through the media. it is not a matter of complaints and allegations coming before the committees that they are not paying attention. >> i have one more question. some callers -- some scholars have to find that defining a

duty for members of congress would be an easy solution that could be done three senate resolution. do you agree with that? >> i think passing a statute along the lines suggested would be an effective solution. >> a senate resolution? >> i thought you meant legislation benigno, a senate resolution. accomplishesink it that much, it is like motherhood salute. >> i appreciate all of your testimony. i and my staff will make ourselves available to meet the deadline of the 14th and 15th but i have to get on the floor for the armed services committee. >> thank you for your work. >> thank you very much. let me first say that i remember when i was on the anchorage

assembly and we had to write the ethics code. i came to the conclusion that you are ethical or not. you can provide all the roles you want but if you are going to cheat, you will cheat. keeping that in mind, disclosure, disclosure, disclosure. you can go on my website and find every single disclosure form i have ever filled out since 1988 in any office, and a public facility that i have participated in. the challenge we have here -- i know it is hard for us to do simple things around here but actually simpler is better sometimes and i like your approach. in the senate, effect as a constituent of mine in alaska to get a copy of my disclosure forms, thank god i have it on line because they would have to come to washington, d.c. or have

someone here come down to the clerk's office and get a copy of it, copy it, and then get it to me or get it to them in alaska. neither one of these bills requires electronic, searchable databases. i agree that you can file these things very quickly. i have done trades but that is all public disclosure. i want your comment on either both these bills are any legislation should be required that any trade, and the action, should be electronically available to anyone at any time via the internet and searchable. i will go down the list. >> in this day and age other than perhaps a shortage of resources in the office of public records that would be needed to manage it, it is not

clear to me why there would not be and should not be rigid >> it costs us more to do what is going on now to do and processing when people send in their forms. >> there are nonprofit and outside groups that are on line already. why shouldn't the senate do it? >> correct, sir you are a yes. >> yes. >> what you propose is on page 14 of my testimony that this should go i website so journalists could find this. constituents, too. they are the best enforcers. people lose public of us because of ethical issues. >> agreed and if you are a high- ranking executive in a public corporation today, you have 48 hours to file.

>> which we required to do. >> that's right, and that immediately becomes an issue. >> you are making my point. >> i am a yes as well >> it was a softball but the reason i ask this is because we collectively -- i am looking toward the 12 members that will do the markup. this will be insistence on my part. the disclosure forms have the annual report of stock trades. if someone wants to search through that, you cannot. it is the most ridiculous system i have ever seen. i want to put that on the record that if we don't do that, we will pass another law that will go off somewhere and a good government groups will be out there, constituents mad at you and your opposition.

will be the searchable databases people. to mr. coffee, your idea, i will turn to the rest of the four for them to comment on your idea. it is hard for us and i am not an attorney. no disrespect to all the folks here but simple is better. the more detail, the more outcry people have in my view. that is a concern. let's see what people think of mr. coffeepots idea? >> if the idea you're talking about is a one liner that says members of congress have a fiduciary with respect to information they learn in committees, any place, i think you need to be careful. you need to think about the potential consequences to what

you do as senators beyond financial transactions. for example, the privacy act does not apply to the congress. you are therefore able to do certain things with information that you received from constituents and others that may not be consonant with the privacy act. you have more freedom to use information then the executive branch. if you create a blanket fiduciary obligation with respect to congressional information, i think you want to be concerned about how it could affect your representative functions and your oversight functions and your function of communicating with others be on the financial transaction area. >> i have not seen the precise language but i think i can do it in two sentences. apropos of what was just said, i think it has to relate

specifically to what insider trading is which is profiting from that information without talking about the other producer possibilities that could be associated with that. >> good. >> i would support one sentence. >> it is amazing that lawyers get down to one or two sentences. >> i wholeheartedly agree that simpler is better. i would encourage avoiding the concept of fiduciary altogether. the sentence would be purposes of the misappropriation theory, a duty of trust and confidence exists when ever a person is a member of congress or a federal employee and has learned that information through government service. one possibility would be congress could authorize the securities and exchange commission to add that

subsection to existing rules. rule 10b-5-2 says an insider is presumed to be in night relationship with the source of information. that is the fed prong working backwards, the history pattern of practice and they have promised to maintain information in confidence. if congress were to authorize the securities and exchange commission to authorize a fourth section, i think that would improve the clarity. going back to my point to senator collins before, it would apply the same law to everybody else. i think that is a very important principle that should come out of any legislative action. >> i have to the fur to the -- that would not release of your

problem of the featured debate clause which would not allow prosecution in many of these cases. sometimes the ethics committee is the only option left. >> i am a big supporter of the concepts of this legislation. disclosure to me is critical but also how easy it should be is how we increase -- create more enforcement because the public becomes the enforcer in a lot of ways. >> thank you, mr. chairman. i assume you're on my bill to make sure that campaign disclosures are filed electronically? >> i believe i am but if i am not i will beat. i like it very >> that's good. i want to welcome all the panel members and i appreciate your perceptions and comments. i'm not as good as the chairman and i did not understand everything you said. >> i wasn't under oath.

[laughter] >> it is ironic because three or four hours ago, mr. coffee was with the banking committee and it was your brother. we appreciate all your testimony today. people talked about the stock act but we need to be careful because there are unintended consequences. whatever we do. those consequences may be something that limits our ability to legislate and create policy and do the things we need to do as senators or house members. i want to approach it from a similar way that we talked about earlier and that is from a transparency standpoint. if we did things like made financial disclosures transparent, if we made our schedules transparent and online, if we require ethics

audits of senate and house offices -- and then i thought there would be unintended consequences. can you think of anything we do that should not be transparent? i believe and transparency. i think we should do the maximum to let everybody know we we are doing. that cleanses all the problems. i believe the forefathers were right when they said we need to have a citizen legislature. is there any area you can think of where transparency might be inappropriate? will star with me you,lanie. >> i cannot see where that would be inappropriate. i think the ethics committee needs to have the ability to audit members routinely. they get these financial disclosure forms but they only make sure they are filled out they don't compare them with a tax return to make sure that

they fit together. if we saw more of that, we might find some problems. there was a situation in the health -- house ethics committee will make represented did not fill out a form and the tax situation showed a different situation. >> i cannot think of a downside to transparency that would be specific enough to articulate at this time. i am in favor of transparency. >> i agree, also. if somebody is bent on as -- acting unethically they will violate the disclosure rule as well as the substantive role. insider trading often takes the form not of transacting securities in your own account because it really is so transparent already but establishing a friendship in a foreign country with a foreign bank account, laundering money

or laundering ideas -- >> if that was found out by one of us, we'll would benoodled, don't you think? >> i have seen clever enough insider-trading schemes that very successfully did -- avoid detection for a long period of time. if you try to expand transparency and not simply to traits but to the communication of information to others which is the route by which profit often comes, you will run into difficulties with respect to the work you do on that help them a fair point, thanks. >> i think law professors mark macon public think of brought some problem with transparency. the way to deal with that is to get thesec example of authority. the sec can be given an example of a role to carve out safe harbors.

and exemptions. >> i am not smarter than prof. coffee but i see some concerns with across the board transparency in everything the senate and congress does of that is what your asking them of that is what i am asking. >> there will be many sessions that would not be transparent and deliberations as committee members behind the scenes that probably should not be transparent. i think there is even less room today for negotiation and trade- offs between members of different parties than there has been in the past that would perhaps be less so if everything were transparent. as far as audit function for the ethics committee, i don't think there is any thing -- i think it is a good idea in principle but obviously, it would require a

vast increase in resources for the ethics committee and whether or not that would be possible would be the question. i would also be concerned of all communications, congressional communications with whoever were to be transparent. i think there would be some serious a fax. >> i don't think either one of these bills deals with personal real estate where a person would increase the value of their own personal real estate by advocating for policies that would help them regardless of what that would be. it seems to me that that is much more easier to track down an insider trading. is that a fair statement? i don't do with insider trading

so i have very little knowledge of it. i wish a had enough money to buy stock but i don't the. >> one possible scenario from that example is insider-trading in real estate. you could use information in a real property purchase as opposed to a securities purchased them up for purchasing property and an antenna with policies you pass. >> that could be another problem as well. that is not the same problem as using material non-public information that one learns of government service to actually purchase physical real-estate. that could be prosecuted under a federalmail and wire fraud fraud statutes in much the same way insider trading can. there is precedent where a government official, a chicago politician, used information

that he came upon in connection with his ealdorman service and he was prosecuted under the federal mail and wire fraud statutes by the department of justice. >> he used that information to buy land? >> i believe it was an interest in an apartment building that was going to receive a tax abatement. >> what if you own land and you advocated for an appropriation to build a highway over it or something along those lines that would add value to that property? >> one could imagine a similar situation on the securities side. you could take a favorable legislative action to a company whose stock you own. that could be a problem. >> this bill would not cover that? >> not that i can see. >> but banking, mr. chairman. >> do you have more questions? >> i have more questions but i think i got that hammered out.

i appreciate the perspective of the panel and thoughtfulness. i think it is very difficult to take a look at ourselves and say that people think we are crooked when you don't think you are doing anything wrong and there is no intent whether it is dealing with a policy with the farm program were talking to your neighbors. that may impact the price of wheat or futures or something like that. on the other side of the corn, it is critically important that we operate in a way that is totally claim, totally claim. if there is any way we can do that, we should make those policies mandatory. transparency is important. i get your point. as far as the forms we filled out, it should be in searchable databases and are scheduled to

be on line and we should let people know everything they should reasonably no on line in a way they can access it. i think we need to be aware of this. we have a 9% rating? i don't think this helps. if somebody in the senate or the house does something crooked, it reflects on everybody whether they are honest or not and that is just the way it is. we need to address this in a common-sense way because of the problem does not create more problems than it fixes. >> thank you very much. senator mccaskill? >> i have been presiding so i apologize. it is pretty important that we clarify that this law applies to congress. i know there is a legal argument that is great for hypothetical

but for purposes of clarifying to the public, regardless of what the sec says, i think it would be helpful for us to pass this legislation and make it crystal clear that the rules that apply to companies and ceo's apply just as much to members of congress in terms of their ability to have and use information not available to the public. you all may have cover this and if you have, don't answer the question because i can move on. have you characterized what you think it might be a challenge -- what you think it may be a challenge to prosecute these cases in cong wh risk --y -- why you think it may be a challenge to prosecute these cases in congress? >> the ethics committee has enforcement over that. >> we addressed other practical problems as well.

>> as a former prosecutor, it seems that one of the things that makes it easier to prosecute these cases in congress is that it is much clearer what is a public record and what is not. i think the m is moreurky in private, -- i think the is moremurky what is more private and what is not. the records available to the public here and we pass laws and the dates they are passed are available to the public. there is a great deal of information that prosecutors could easily see whether or not this is something that someone who looked into it could find with some great ease or whether it would be more difficult. in some ways, would anybody disagree that these cases might be easier to prosecute because

-- it is very hard to have inside information in congress. this place is pretty open in terms of what gets out to the public but even in a formal context, a great deal of our work is public. >> i would not disagree. because so much as open in congress, i think it becomes difficult. the issue of something being non-public information, that would be an obstacle to overcome. if that were alleged in a given case, i think you would find some pretty rigorous defense this and it tends to prove that the information in question was public. >> right, right, i have five things that i have been told we need to better in legislation and some of them have been

mentioned but i want to make sure if there are disagreements on any of them. when he to better cover the information -- we need to better cover the information and talk about regulatory action and grants, earmarks, contracts, shorten the time of disclosure and 90 days is way too long and we have a measure of transparency now that allowed some of the things to be written even though many things that were written were inaccurate or flour. wrong -- or flat wrong. information was available to the public because of the roles we currently have, expanding the type of securities that are covered, explicitly stating the members' duties and finally specifically laid out in legislation that members cannot give insider tips. ok, those of the five things i

think we need to put in the legislation and i think we've got a significant amount of problems out there with the public right now the more quickly weaken passes legislation and demonstrate to the public that none of us -- frankly, i'm not sure i have met anyone who has gone into this line of work because they thought there going to receive a greater. the money i'm not arguing that there may have been some people that used their positions and appropriately. there have people who have gone to jail in congress. all of us want to make sure that the public knows we're not using his position in any way to gain personally from it. the more we can do to reassure them in that regard, the better. i think we need to write to this legislation in a way that does that. the last thing i would ask about earmarks.

we have a current moratorium on earmarks and i am sponsoring legislation on a permanent moratorium. knowing that a member would have the ability single-handedly to put public money in a project certainly could lead to the kind of information that would allow someone to benefit from that knowledge since there is absolutely nobody that as an naysay as to whether it is good, bad, or in different other than that individual member. have any of you discussed howearmarks might lend themselves to this kind of activity that the public would disapprove of? >> i don't think we disgusted but if i understand what you are saying, it would be a material non-public information. if you know you going

toearmark resolutions and you buy that stock, that falls easily within non-public information. >> there have been thousands of earmarks done for research and development for research and technology and a great deal of that technology has worked itself in the marketplace. i think that is one area we need to make sure that we cover. that is the essence of an insider information. somebody single-handedly can provide the resources to make that research and development a reality. yes? >> i would agree with respect to earmarks. as you listed of a cure forfi 5xes, i would encourage you to think of a 6th which would be a clear statement that builds on the floor of the existing law.

it should not be read to displace 1 rule0b5 and 0 mail and wire fraud status with regard to federal employees and congressional officials or members of congress security trading. >> these are good old fashioned fraud cases? >> or write to. >> i think that would be important. we don't want to start a new book a precedent. >> is rather important that to not try to reach different established terms. they are read to find in this legislation that would raise questions about whether congress has different information than in ordinary cases. if you say your adopting be a existing case law with all the terms, i think that gives greater certainty to the court's ban that is a great idea and i will share that with other co- sponsors. there are three or four was working on this.

we will look for your input as we further get drafted and tried to improve it and make it as strong as possible. we appreciate all of you being here today and helping us with this. we want to do this right. >> thank you, mr. chairman. >> i mentioned earlier that ideally we will get something drafted that we can get a majority of the committee before we depart in december. i have a couple more questions -- we have gone over pretty well and hopefully to the committee what we should do -- and helpfully to the committee to make clear in law that members of congress and are steps are covered by the insider-trading laws. there are two other responses that are possible here. one deals with senate ethics but the first one to talk about is

disclosure which you have also talk. aed about. this is more in the way of prevention. let me talk about ideally how would you alter the requirements in the ethics in government act for disclosure? we talked a little about the electronic filing and i think that is a very good idea. you talked a little bit about requiring that we file more than once per year, presumably after transactions. i want to invite you to spend a little more time on how you would ideally have us change the ethics in government act with regard to filing.

>> you would not have to change the government in ethics act. the ranges are so wide it is often impossible to tell what a person's assets really are and how much income they have had from those assets. the forms are filed once per year and they are filed six months after the previous year ended. they are pretty far down the line. those forms are not searchable. i spoke with the reporter who wanted to see if members had a specific asset and you cannot search them for that. the technology that is available, there's no reason these forms are not put on the web quickly and searchable so

the information is easily accessible so if there is wrongdoing, it can be ferreted out quickly. >> i agree. one alternative is in instead of or in addition to having as file bowl form once per year that there could be some requirement amendments after stock trades of a certain amount. is that a possibility? >> there should be something separate for stocks. rather than this 90 day period included now, i would get it down to 10 days because i don't think it needs to be so burdensome because the information comes in electronic form and you could set up a data base so you need only push one

button to transfer it into the larger information. it needn't be burdensome. i would make clear that lying on those kind of forms and failing to disclose that information could be a false statement to congress and those kind of false statements are easily prosecuted than anything else we have been talking about. >> before i move on to the rules that have to be changed by the senate in this regard, do any of you have any other ideas on the panel about how we might alter the existing senate and house disclosure rules to prevent insider trading or make it more discoverable? >> i agree that the provisions that would call for public

disclosure of stock transactions within a specific period of time would go along way to deter an insider-trading where it may be occurring. i'm not sure i agree with the 10 best day period. failure to provide full information could be prosecuted under the false statements that. i think 10 days is a short window. maybe 90 days is too long but i think that kind of frequent, more frequent periodic disclosure makes sense. moment on thea question of the rules of the senate. your concern about the impact of prosecution of members of congress and using insider

information -- how would you change our rules to deal with this problem? >> that clause only applies if a member is being prosecuted. it does not have any implications for the ethics committee. >> and for congress itself. >> are right, a prosecutor could not easily sift through committee files to see if someone had insider information, the ethics committee could. i think the ethics rules are not clear enough and the house ethics committee issued guidance two days ago. i think it is imperative to make it crystal clear and lay it out. the other problem is the ethics committees are very soft on members of congress. is somebody will only get a mild

reprimand or a letter of admonition, that does not heard very much. if you included some think the specific, which you could, like a financial penalty at a significant amount, that would be a disincentive. >> you would make it clear in our roles that insider-trading is a violation of the roles? is it as simple as that? >> yes, and there are certain penalties them understood. >> understood. what do you think of this idea? >> i think there are roles that address this. the big problem in the senate and house with respect to use of paragraph 8 of the code of ethics of government services is that there just isn't across the

board from committee to committee and office to office specific obligations and rules and policies regarding what information is confidential. getting at it at that level is important. i think there are rules in place. there were a rule crafted that mentioned insider-trading specifically as part of rule 37 on conflicts of interest, that would not be harmful provided it were crafted in a way that would not have other chilling effect. s. as to the notion of the ethics committee actions not having sufficient force, i would want to ask certain members whose careers were ended by having letters of admonition if they think that is a soft action.

the ethics committees and not criminal enforcement agencies but i think if you chose to strengthen the rules regarding insider trading within the congress, that would be a reasonable approach. >> my final question -- two days ago the house ethics committee released a memo to all house members and staff stating in part "house rules prohibit members and employees from entering into personal financial transactions to take advantage of any confidential information obtained through performing their official government duties." to what extent if any of that kind of statement by the house ethics committee establishes the necessary fiduciary duty we have

talked about as a condition of a successful insider-trading case against a member of congress? >> i think you will get different responses. a fiduciary duty as a kind of property rights. it is a relationship between the director and the company, the employee, master, principal, etc. an ethical duty is far more general. the boy scout oath is an ethical duty. i don't think it gives rise to the kind of relationship that can support a criminal prosecution. >> i share much of that view. to a judge predisposed to find fiduciary duty on capitol hill, that simply adds to the case. to a judge not inclined, there are always in the world. >> that disinclined judge would want to see the concept of

fiduciary duty spelled out in labelle not a clear statement, yes. >> i would encourage the use of the term trust and confidence rather than fiduciary duty. the supreme court has made it clear that you don't have to stand in explicit fiduciary relationship in order to fall under the appropriation theory. i think it would put one more brick on the scale in terms of is there an and the ship of a -- there is an indicia of trust. prosecutions are based on this where everyday ordinary individuals will be prosecuted. what is included in the sec

complaint or the justice department's indictment is very ethical language like the boy scout code. that is put in as a paragraph in the indictment or in the complaint. to answer your question, this would be another paragraph in a complaint it came to that. >> thank you, you have been very helpful. >> i have one question -- how we address -- how do we address sales in terms of disclosures, purchases and sales within a managed fund? in other words, if a member of congress has a fund that date by which is a large -- whether it is an index fund are whether it is another kind of the fund, do you believe the duty to report, would we be creating a new duty for the manager of that fund to

have to let this particular member know when they are buying and selling stocks within the fund or with their only be a duty to report the purchase and sale of the overall fund? do you understand the question? >> [inaudible] it would be different if he tipped the fund manager. >> there can be no intermission going from a member of congress to the manager. whatever decision the manager had the legal authority to make internally that the member had no control over, that would not have to be something reportable every 10 days for 90 days? ok, i was curious. >> thank you very much. you have been expelled extraordinarily helpful panel. -- you have been an extraordinarily helpful panel.

we say we have a problem and how can we best solve this problem legislatively? i think you have helped the committee in a substantial way. you also made the mistake of offering to continue to be available to review the work we do so i will take advantage of that. i said earlier i hope we could do something on this before we leave december 15. that is two weeks from today. we could do that. i think we have to find a balance to make sure. this is important and complicated we should do as much as we are confident we've got right on december 15. if we hold parts of this over until january when we come back, that is not terrible. we will leave the record of this hearing open for 10 days for any additional questions and statements. i thank the witnesses again very much and a hearing is adjourned.

[captioning performed by national captioning institute] "washington journ [captions copyright national cable satellite corp. 2011] >> here is what we are covering on c-span 2 this morning, majority leader eric cantor and other republican leaders will be holding a press conference at the capitol. live coverage begins at 9:15 eastern. at 10:00, a subcommittee will hold a hearing on the proposed keystone pipeline and its possible impact on gas prices and energy production. here on c-span, "washington journal" is next live with your phone calls followed by live coverage of the house would work on a bill dealing with the process of creating regulation. and about half an hour, we will talk with bloomberg news reporter stephen sloan about