Summary#
This bill would make it illegal to trade certain financial contracts while aware of nonpublic, material information that was obtained through early or special access to social media posts from certain government-controlled accounts. It would also ban social media platforms from offering or selling such prioritized access to posts from those covered accounts. The stated policy goal is to prevent people from profiting from privileged early access to government communications.
Key changes:
- Makes it unlawful to buy, sell, or direct trades in securities, commodity futures, options, swaps, or speculative information-market contracts while aware of material information obtained through prioritized access to certain government-related social media posts.
- Applies to social media accounts controlled by or used on behalf of federal officials, many federal employees, Members of Congress, judicial officers and staff, their immediate family members, and federal agencies. It also covers the 180 days after an official leaves office.
- Treats violations involving securities as enforcement matters for the SEC and violations involving commodities and futures for the CFTC. The SEC and CFTC must issue joint rules within 180 days to implement the trading ban.
- Prohibits social media platforms from knowingly offering, selling, or otherwise making available prioritized access to communications from covered accounts, with a few limited exceptions (e.g., ordinary algorithmic ranking, emergency public-safety access, non-discriminatory data-licensing).
- Allows the Attorney General to sue platforms that violate the ban and recover a civil penalty equal to the total revenue the platform received for the prioritized access.
What it means for you#
- Investors and traders: You would be barred from trading while aware of material, nonpublic information obtained early through prioritized access to covered government social media accounts. That ban covers many types of financial instruments, not just stocks.
- Social media platforms: Platforms must not knowingly offer paid or restricted early access to posts from covered government accounts, except under narrow exceptions. Platforms would need to change products or services that give special timing or format advantages to some users for those accounts.
- Covered government officials and family members: Posts made on accounts that qualify as covered social media accounts could not be the basis for early-access trading. The rule covers many officials and their immediate family members and continues to apply for 180 days after an official leaves office.
- Financial firms and compliance officers: Firms will likely need new policies and monitoring to avoid trades made while staff are aware of prioritized covered information. Compliance teams may need to track whether information came through prioritized access.
- Regulators and law enforcement: The SEC and CFTC must write rules implementing the trading prohibition. The Justice Department (Attorney General) can seek civil penalties from platforms that sell prioritized access.
Expenses#
No publicly available information.
Possible costs or budget effects (inferred from the bill text):
- The SEC and CFTC will incur costs to draft and implement joint rules and to supervise compliance. This could require staff time and technical work.
- The Department of Justice may incur costs to bring civil enforcement actions against platforms.
- Social media platforms may face compliance costs to change products and recordkeeping. Platforms that previously sold prioritized access could lose that revenue or face penalties equal to the revenue from such access.
- Financial firms may face compliance and monitoring costs to avoid trading violations.
Proponents' View#
- The bill appears intended to stop people from using privileged early access to government social media posts to make trades that others cannot. This could be seen as improving fairness in financial markets.
- It could discourage platforms from creating paid or exclusive early-access products tied to government communications.
- The measure could increase public trust that government communications are not being monetized in ways that let some investors profit before the public.
Opponents' View#
- One concern is that the definitions are broad. The bill covers many categories of officials, their family members, and agency accounts. It may be unclear which accounts or posts qualify as covered in specific cases.
- The bill does not clearly explain how to prove a person “knew, or reasonably should have known,” that information was obtained through prioritized access. That could make enforcement and prosecutions harder.
- It may be hard in practice to decide when a communication is “generally available” on a social platform versus available only to some users. This technical determination could be disputed.
- Platforms and small firms could face substantial compliance and technical costs to change features, monitor products, and document access paths.
- The bill allows large civil penalties for platforms equal to the revenue from the prioritized access. The size and effect of those penalties are not quantified in the text.