Human Interest - Bensalem Township
Report: Stock Trading by Congress Could Be Banned in Bipartisan Push
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At least 25 bills have been introduced this Congress to further limit lawmakers and their family members from trading individual stocks, and representatives across the aisle renewed pressure Wednesday on U.S. House Speaker Mike Johnson to take up the issue.
Their contention is members of Congress hold a serious advantage over everyday Americans when buying and selling stocks because of their access to information on Capitol Hill.
The House Committee on Administration convened Wednesday morning to hear how existing guardrails laid out in the 2012 STOCK Act fall short and consider the options to revamp it.
The Stop Trading on Congressional Knowledge Act, shortened to the STOCK Act, codified that members of Congress, congressional employees and other federal officials are not exempt from federal insider trading laws.
The law also required that lawmakers and certain congressional staffers must disclose stock transactions that amount to over $1,000 within 45 days.
The law built upon the late 1970s-era Ethics in Government Act that established financial disclosure requirements for officials in all three branches of government.
“While rules already govern how public officials trade stocks, stronger restrictions may be necessary to restore trust and ensure officials are not profiting from their positions,” said Chair Bryan Steil, R-Wis.
Ranking member Joe Morelle, D-N.Y., said that he “unequivocally” supports a ban on members of Congress trading individual stocks and “that ban should extend to the co-equal branches of government as well.”
Law seen as ineffective
Policy experts before the committee poked holes in the protective measures already on the books.
“Despite allegations of improper conduct, no member of Congress has ever been prosecuted under the (STOCK) Act, nor do any public records exist indicating that officials have ever paid statutory fines for STOCK Act disclosure errors,” said James Copland, senior fellow and director of legal policy at the conservative Manhattan Institute.
Trust in lawmakers and government officials to self-police is eroding, argued the experts and several committee members.
Roughly 86% of the public across party lines wants to ban members of Congress from trading individual stocks, according to a 2023 survey from the University of Maryland School of Public Policy.
Dan Savickas, vice president of policy and government affairs for the advocacy group Taxpayers Protection Alliance, said data collected by stock activity trackers and journalists reveals Congress’ sticky entanglement with the market.
According to a January 2024 report from Unusual Whales, a platform that monitors lawmakers’ stock transactions, dozens of members who traded in 2023 outperformed the S&P 500 Index.
A New York Times investigation published in 2022 found 3,700 stock transactions by members of Congress from both parties from 2019 to 2021 “posed potential conflicts between their public responsibilities and private finances.”
Savickas said a number of issues exist in the law’s current form, not least of which is that the STOCK Act “does not prevent conflicted trading by members of Congress, but merely requires them to report when and if they do so.”
Plus, many report them late without consequence, he added. Additionally, a violation is only subject to a $200 penalty and enforcement is left up to the executive branch, leaving it vulnerable to subjectivity and politics, Savickas said.
Some members of the committee questioned how lawmakers would be taxed should they be forced to divest, and how to navigate specific family investments. That included Rep. Morgan Griffith, R-Va., whose family owns 20% of a community swimming pool he and his family have long used.
“How do we make sure that we’re not eliminating me or making me sell something that I feel strongly about? This has been part of my childhood, part of all my kids’ childhoods,” Griffith said, adding that his son coached the local swim team to the championships last year.
“How do we protect that while curing the ills of people who are trying to do bad things?”
‘As crooked as a dog’s leg’
During a press conference ahead of the hearing, Rep. Tim Burchett, R-Tenn., said “this place is as crooked as a dog’s leg, and it needs to stop.”
Credit: Congressman Brian Fitzpatrick’s office
Burchett joined Reps. Brian Fitzpatrick, R-Pa., Pramila Jayapal, D-Wash., and Seth Magaziner, D-R.I., in urging Johnson to bring to the floor the Restore Trust in Congress Act, a bill joining together several members’ proposals from this year.
The bill would prohibit Congress members, their spouses, and any dependent children and trustees from owning, buying or selling securities, commodities, futures and certain other assets. If enacted, a lawmaker and their family members would have 180 days to divest. Those newly elected would have a 90-day timeline to do so. The ban would not apply to diversified funds.
“Everybody standing here along with a number of others have been working on this issue for some time,” Magaziner told reporters.
“We all worked together over the course of the summer to come up with a single, unified bill. So we have one bill, one strategy, and now it is on leadership to get this done and give us a vote,” he continued.
Other leaders on the issue who’ve signed onto the joint effort include Reps. Anna Paulina Luna, R-Fla., Chip Roy, R-Texas, Alexandria Ocasio-Cortez, D-N.Y., and Joe Neguse, D-Colo. Nearly 80 others signed as cosponsors in addition to the 16 original names.
Fitzpatrick said lawmakers “have to get this done, we will get this done this Congress.”
“Mark my words, this bill, or a bill, will come to the floor, hopefully through an open amendment process where we can make this better,” Fitzpatrick told reporters.
“If we are all willing to accept the premise, and I hope everyone is, that members of Congress unequivocally have access to inside information — we do — if you accept that premise then we have to do something on the stock trading front,” he continued.
Johnson timeline for action
When asked by States Newsroom if Johnson has a timeline for bringing any of the proposals to the floor, a spokesperson responded in an email, “We’ll defer to House Admin (committee) for the time being whether they plan to markup a bill etc.”
Johnson told Punchbowl News in September that a stock trading ban bill is “a tough issue.”
In May, Johnson said he worried whether a ban would affect who could serve in Congress because salaries haven’t risen in several years.
“But on balance, my view is we probably should do that because I think it’s been abused in the past and I think, sadly, a few bad actors discolor it for everyone,” he said.
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