A Maryland federal judge has hit the pause button on implementation of a controversial law provision requiring online disclosure of the financial assets and transactions of many federal employees, their spouses and children.

On September 13, Judge Alexander Williams of the District of Maryland issued a preliminary injunction in Senior Executives Association v. U.S. The ruling delays implementation of a provision of the Stop Trading on Congressional Knowledge Act of 2012 (the Stock Act) until October 31.

The provision of the Stock Act, which became law in April, was slated to take effect on September 30. The provision affects 28,000 executive branch employees.

The law was originally designed to stop members of Congress and their staffs from using nonpublic information for stock trades. It increased disclosure of trades to make compliance monitoring easier.

Senator Richard Shelby (R-Ala.) introduced an amendment in February to require executive branch employees to make the same disclosures. “It only seems fair that executive branch officials…be directed to meet the same additional reporting requirements being imposed on the legislative branch,” Shelby said in congressional testimony.

On August 2, the American Civil Liberties Union filed the lawsuit on behalf of groups of federal employees and individual high-ranking employees.

The American Foreign Service Association, the Assembly of Scientists and the National Association of Immigration Judges are supporting the plaintiffs.

One of three “Jane Doe” plaintiffs is an administrative law judge. Four other officials also joined the suit: Janice Caramanica, acting chief of the intake and resolution section in the State Department’s Office of Civil Rights; Evelyn Upchurch, field operations training coordinator for the U.S. Citizenship and Immigration Services; Joshua Zimmerberg, a program head at the National Institute of Child Health and Human Development; and Michael Ryschkewitsch, chief engineer for the National Aeronautics and Space Administration.

The lawsuit, which Pillsbury Winthrop Shaw Pittman is handling pro bono, claims that the law’s disclosure requirements for executive branch employees violates their constitutional right to privacy, the Administrative Procedure Act and the Fifth Amendment. It also claims that widespread release of the information over the Internet would cause “irreparable injury.”

The plaintiffs claim their financial dealings are already tracked because many senior civil servants and military officers must file annual financial disclosure forms about assets, income and financial transactions, plus some information about their spouses and dependents. The Ethics in Government Act of 1978 requires such filings. It also limits release of that information to applicants who disclose who they are and any organization behind the request. The ethics act also barred use of the employees’ information for commercial purposes, credit ratings or to solicit funds.

In his opinion, Williams cited the U.S. Court of Appeals for the Fourth Circuit’s 1990 ruling in Walls v. City of Petersburg and noted that “[t]he constitutional right to privacy protects ‘[p]ersonal, private information in which an individual has a reasonable expectation of confidentiality.’ “

He observed that informational privacy rights “assumes added importance in the Information Age,” concluding, “Judged against these principles, Plaintiffs have shown a likelihood of prevailing on the merits of their right to privacy claim. The Act prescribes the publication of sensitive financial information. This information generally includes the disclosure of assets, income, liabilities, and financial transactions, including securities transactions of a certain amount. Under the authority of Walls, this ‘[f]inancial information… is protected by a right to privacy.’”

The preliminary injunction gives Congress a chance to act on the controversial provision now that it’s back in session, said Arthur Spitzer, legal director of the ACLU of the Nation’s Capital. “The important part of the decision is that the judge found on the current record we had a strong probability of winning on the merits and the government has not shown any compelling reason for putting this financial information on the Internet for the whole world to see,” Spitzer said. “Therefore the constitutional right to privacy probably will protect our client from this ill-conceived law.”

Through a spokesman, the Office of Government Ethics, which was named as a defendant along with the United States, said the agency does not comment on litigation.

Shelby’s office did not immediately return a call for comment.

Craig Holman, a government affairs lobbyist at consumer advocacy group Public Citizen, which has pressed for the law, could not be immediately reached for comment.

Sheri Qualters can be contacted at squalters@alm.com.