Democratic leaders in Congress on Wednesday indicated they’ll support stronger restrictions on stock trading for members of Congress, including banning the practice entirely.
There’s already a groundswell of support from Democrats and Republicans on both sides of the Capitol for stronger restrictions on their financial portfolios. It’s a rare point of bipartisan agreement for two parties finding less common ground with each passing day.
Senate Majority Leader Chuck Schumer referred to stock trading as “an important issue that Congress should address” and has asked Democratic senators to come up with a bill to consider, and he is encouraging them to work with Republican counterparts.
In the House, Speaker Nancy Pelosi has charged the House Administration Committee with writing new rules but she also has some changes she wants to see made.
“We have to tighten the fines on those who violate the STOCK Act,” she said, referring to 2012 bill that banned members from trading in the financial markets based on nonpublic information they were able to access because of their elected office. “It’s obviously not sufficient to deter behavior.”
Pelosi also reiterated Wednesday that she wants to see financial disclosure requirements extend to the judicial branch, including the Supreme Court, which is not subject to the same financial disclosures required of members of the legislative and executive branches of government.
“The Supreme Court has no disclosure. It has no reporting of stock transactions, and it makes important decisions every day,” she said.
Pelosi has grown more receptive to congressional action on stock trading as more lawmakers have expressed support for stricter rules. A few weeks ago, she was skeptical.
“To give a blanket attitude of, ‘we can’t do this and we can’t do that, because we can’t be trusted,’ I just don’t buy into that,” she said. However, she added, “But if members want to do that, I’m okay with it.”
Proposals to limit or ban stock trading have garnered the support of members across the ideological spectrum, from progressive Michigan Democrat Rashida Tlaib to conservative Florida Republican Matt Gaetz. Both signed a letter to House leadership last month urging them to consider legislation that would bar members from owning or trading individual stocks.
“There is no reason that members of Congress need to be allowed to trade stocks when we should be focused on doing our jobs and serving our constituents,” the letter read. “Perhaps this means some of our colleagues will miss out on lucrative investment opportunities. We don’t care. We came to Congress to serve our country, not turn a quick buck.”
There are already multiple legislative proposals in both chambers for leadership to consider. The Ban Conflicted Trading Act would prohibit lawmakers and senior staff from owning or trading individual stocks, as well as serving on corporate boards. That proposal comes from a bipartisan group in the House — Representatives Raja Krishnamoorthi, Alexandria Ocasio-Cortez, Joe Neguse, Matt Gaetz and Michael Cloud — as well as Democratic Senators Jeff Merkley, Rafael Warnock and Sherrod Brown.
Another unlikely bipartisan pair in the House — Virginia Democrat Abigail Spanberger and Texas Republican Chip Roy — have introduced the TRUST in Congress Act that would require members of Congress as well as their spouses and children to put certain investment assets into a blind trust while they’re legislating in Washington. Democratic Senators Jon Ossoff and Mark Kelly introduced a companion bill, the Ban Congressional Stock Trading Act, in the Senate.
Congress formally banned trading stock based on nonpublic information with the 2012 STOCK Act. The bill came on the heels of a 60 Minutes report which illustrated how members, who were considered exempt from insider trading laws, had grown richer while in office through means that while legal, seemed at odds with their power as lawmakers.
But an investigation by Insider last year found more than 200 examples of lawmakers and senior Capitol Hill staff failing to report their stock trades under the timeframe required by the law — and no public records of whether they ever paid the penalties required for tardy filing. Late filings draw a fine of $200 for the first offense, with higher fines for repeat offenses.
At least one new proposal would raise these fines. Senators Elizabeth Warren and Steve Daines struck an agreement on a bill to ban stock ownership and trading among members of Congress, with a $50,000 fine for each violation.
“No one in this country should ever have to wonder what motivates a lawmaker. Is that what that lawmaker believes is in the best interest of the American people or in the best interest of the lawmaker himself or herself? That shouldn’t be an issue,” Warren said.
Multiple senators came under investigation by the Justice Department when they or their spouses bought and sold stocks at the start of the COVID-19 pandemic as lawmakers were beginning to receive briefings about the new virus. All were ultimately cleared, including North Carolina Senator Richard Burr, who stepped down from his position as the top Republican on the Senate Intelligence Committee following an FBI investigation into trades he and his wife made ranging from $600,000 to $1.7 million.
But while momentum is growing for a change in the rules, there are still some lawmakers who question whether new regulations are really necessary.
“There’s already plenty of laws in place for insider trading and it’s a felony for goodness sakes, said Representative Ed Perlmutter, a Democrat, who said he owns stocks he inherited from his father when he died three years ago. “To do a kind of across-the-board ban on stock trading seems a little bit over the top to me.”
But he said he’s willing to listen to the arguments from his colleagues for their new laws.
Congressman Glenn Grothman, a Republican, said members should buy mutual funds or index funds so they can’t be accused of trading in a particular stock.
“That’s what I do, just put your money in the Standard and Poor’s 500 Index Fund or the American Funds Growth Fund, and that way there are no problems,” he said.
Nikole Killion, Ellis Kim and Alan He contributed to this report.
