Deborah Ross, the Democratic challenger for Republican Sen. Richard Burr’s seat representing North Carolina in the U.S. Senate, has repeatedly said Burr is a consummate Washington insider.

This summer she claimed that Burr "took millions from special interests, went there and cashed in, voted to cut (his) own taxes and raise taxes on working folks." We rated that Half True.

More recently, she has been claiming Burr voted against a bill that would’ve banned members of Congress from insider trading.

"It is a fact that Sen. Burr was one of only three senators who voted against a ban on insider trading for members of Congress," Ross said in their recent debate. "And he called that vote brave."

Burr doesn’t deny the vote in question, but he repeatedly said it’s being blown way out of proportion. He defended his actions in 2012 after the vote, and again last month at his debate with Ross.

We wondered what the real story was.

Insider trading

Insider trading is when someone uses non-public information to buy or sell stocks to maximize profit. Depending on the circumstances, it can be legal or illegal.

In April 2012, the STOCK Act – which stands for Stop Trading On Congressional Knowledge – specifically said lawmakers could not use their insider knowledge to trade stocks. It also created several new or stronger ethics and transparency provisions for members of Congress and their staffs.

President Obama asked Congress to pass the bill in his 2012 State of the Union address. A few months later, he got his wish and signed it into law with much fanfare. It was a rare moment of bipartisan celebration, although Ross is right that Burr was one of three holdouts.

Burr said insider trading was already illegal, so there was no need to pass another law singling out members of Congress.

"It is illegal, in law, even for Congress, to trade on insider trading," Burr said in response to Ross’ barb at their debate. "That’s the reason I opposed the STOCK Act. North Carolinians did not send me to Washington to duplicate existing law, and that’s in fact what the STOCK Act did."

Burr, however, is wrong to speak so definitively about that claim.

Legal confusion

There is no statutory definition of when exactly insider trading becomes illegal, so it’s often up to individual judges or investigators to decide.

While Congress was never specifically exempted from insider trading rules, there was widespread disagreement in the legal and financial communities over what officials could or couldn’t do.

If you’re in the mood for a 59-page legal analysis of the differing opinions, read this 2011 paper. Or, here’s a brief synopsis: Some people said the law applied to everyone in Congress. Some said elected officials had to abide by insider trading laws, but their staffers did not. Some said both elected officials and their staffs were exempt.

Since the Securities and Exchange Commission is in charge of policing insider trading, we decided to see what its officials thought at the time. Unfortunately, two high-level officials gave opposite interpretations of the law.

Former SEC CEO Arthur Levitt said in 2010 that elected officials and their staffers "benefit from an exemption that the average investor doesn’t benefit from. They’re immune from insider trading laws." However, former SEC director of enforcement Robert Khuzami said in 2011 that neither elected officials nor their staffers were "exempt from the federal securities laws, including the insider trading prohibitions."

So the STOCK Act at least cleared up confusion from 2012 onward. And at best, it made real changes.

Congressional suspicions

Regardless of the lack of clarity in the law, we do know that members of Congress and their staffers routinely made timely trades centered around upcoming policy decisions.

One 2004 paper found that senators who made stock trades outperformed the market by an impressive 12 percent, on average.

"Since even the best hedge-fund managers find it hard to achieve comparable results, we must conclude that these senators either are better than hedge-fund managers, or that they benefit from privileged information," Luigi Zingales, a professor at the University of Chicago Booth School of Business, wrote in 2011.

Zingales said it was his opinion that members of Congress did participate in insider trading, "despite the potential cost to their reputations."

In 2010 the Wall Street Journal investigated allegations of insider trading by congressional staffers. It found dozens of aides on both sides of the aisle had invested tens of thousands of dollars in stocks that soon benefitted from their bosses’ policy decisions.

One aide nearly doubled his investment in a renewable energy company just before his boss pushed for a new law that benefitted companies like it. Another aide bought thousands of dollars worth of Bank Of America stock just before a report – which her boss was involved in – found in the bank’s favor and sent stock prices surging.

Other parts of the STOCK Act

Yet even if Burr is right that insider trading laws applied to Congress that whole time – and it appears no one knows the real answer to that – he’s still not correct that the law was purely duplicative.

The STOCK Act also strengthened the power of ethics investigators in Congress and expanded transparency requirements – although Congress quietly rolled back the transparency requirements within a year of passing the original bill.

But is Ross also right that Burr called himself brave for voting against the STOCK Act? Yes, and we found the transcript of his remarks on Burr’s own website.

"It's ludicrous," Burr said in a February 2012 radio interview, while discussions over the bill were still ongoing. "That's why Dr. Tom Coburn (a Republican senator from Oklahoma) and I were the two brave souls that walked up and said we shouldn't be doing this."

Burr and Coburn joined with Democratic Sen. Jeff Bingaman of New Mexico in casting the only ‘no’ votes when the bill passed the Senate 96-3.

Our ruling

Ross said Burr "was one of only three senators who voted against a ban on insider trading for members of Congress. And he called that vote brave."

She’s right about Burr’s vote and the fact that Burr called it brave. What’s less clear is whether the STOCK Act simply clarified the law regarding insider trading in Congress, or made actual changes. Regardless, the law did make other changes that Burr ignores when he says his opposition was because the bill was totally duplicative.

We rate this claim True.