Donald Trump's Businesses Could Be Tripped Up By A 2012 Insider Trading Law The STOCK Act bars presidents and members of Congress from trading securities based on the kind of insider information they routinely have access to.
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Trump's Businesses Could Be Tripped Up By A 2012 Insider Trading Law

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Trump's Businesses Could Be Tripped Up By A 2012 Insider Trading Law

Trump's Businesses Could Be Tripped Up By A 2012 Insider Trading Law

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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.

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