McLEAN, Va. -- A new law designed to stop insider trading by members of Congress and nearly 30,000 federal workers is facing a constitutional challenge from the American Civil Liberties Union and other groups.
The ACLU filed a lawsuit Thursday in U.S. District Court in Greenbelt, Md. It says the law's requirement that federal workers disclose financial transactions greater than $1,000 is an unconstitutional invasion of privacy and subjects those workers to a real fear of identity theft.
The affected workers already have to file financial disclosures with the Office of Government Ethics. As a practical matter, though, those forms are rarely inspected by the public. According to the lawsuit, the office received only 79 requests for access to those disclosure forms in 2008, with an additional 127 requests submitted to the various executive agencies themselves. Also, the people asking to inspect those reports must identify themselves.
Under the new law, though, the information is easily available to anyone on the Internet, on the theory that disclosing such information would expose any trades in which an individual benefits from inside knowledge on congressional actions that affect the marketplace. That crosses the line and becomes an unreasonable invasion of privacy, said the plaintiffs' attorney, Jack McKay.
McKay said courts have previously made a distinction between limited public disclosure of personal data and widespread dissemination.
The lawsuit does not seek to overturn the restrictions as they apply to members of Congress and their staffs.
"Congress can do what it wants to do," said Arthur Spitzer, legal director for the ACLU's Washington D.C. chapter.
In its original form, the bill applied only to Congress and its staffers. But an amendment by Sen. Richard Shelby, R-Ala., extended the authority to senior members of the executive branch. Shelby argued that, as a matter of parity, if disclosure was a good idea for Congress it was also a good idea for the executive branch. Obama signed the bill into law in April.
"I believe what is good for the goose, it seems to me, should be good for the gander," Shelby said earlier this year on the Senate floor in support of his amendment.
Shelby's spokesman, Jonathan Graffeo, declined to comment on the lawsuit, but said Shelby worked closely with other lawmakers to ensure that the legislation applied only to those who were already required to file disclosure forms.
In addition to privacy concerns, the lawsuit questions whether the law is necessary. The initial legislation was filed in response to press reports that some members of Congress or their families may have profited on financial deals where they benefited from inside knowledge of how Congress would act. Spitzer said there are no similar reports of such problems on the executive side and that executive branch workers were already subject to criminal penalties that did not exist for members of Congress.
"It's a solution in search of a problem," Spitzer said.
Plaintiffs in the lawsuit include the Senior Executives Association, the American Foreign Service Association, the Assembly of Scientists and the National Association of Immigration Judges.
The law takes effect at the end of the month, unless the plaintiffs can win a court injunction barring the law's implementation.