All members of Congress and their spouses would be banned from trading individual stocks under new proposals introduced this week by one Republican and two Democratic senators.
“Year after year, politicians somehow manage to outperform the market, buying and selling millions in stocks of companies they’re supposed to be regulating. Wall Street and Big Tech work hand-in-hand with elected officials to enrich each other at the expense of the country,” said Sen. Josh Hawley (R-Mo.) in a statement announcing his proposed “Banning Insider Trading in Congress Act.”
“Here’s something we can do: ban all members of Congress from trading stocks and force those who do to pay their proceeds back to the American people. It’s time to stop turning a blind eye to Washington profiteering,” Hawley said.
Democratic Sens. Mark Kelly of Arizona and Jon Ossoff of Georgia also introduced legislation, called the “Ban Congressional Stock Trading Act,” aimed to stop insider trading by members of Congress and their spouses.
In his statement, Hawley said the major provisions of his proposal include:
A prohibition on holding, acquiring, or selling stocks or related economic interests while serving in Congress. Exempted from the prohibition are interests in diversified mutual funds, exchange-traded funds, or U.S. Treasury bonds.
Senators and representatives have six months after being sworn into office to get rid of prohibited holdings or to place them in a blind trust. The blind trust must be maintained throughout their tenure in office.
If the Senate or House ethics committees determine that an individual member has profited illegally on a prohibited stock or related economic interest, the gain must be turned over to the U.S. Treasury. Losses on such transactions may not be claimed on taxes, and the ethics committees may levy additional fines. The violations will be made public via the internet.
The Government Accountability Office (GAO), beginning two years after enactment of the proposal, is required to audit the compliance status of all 535 members of Congress and make the findings public.
- Requires all members of Congress, and their spouses and dependent children, to put certain investments into a qualified blind trust or divest them within 120 days after the enactment of this legislation. New members of Congress, and their spouses and dependent children, would be required to do the same within 120 days of assuming office. Covered investments that cannot be moved into a blind trust must be divested.
- Prohibits members, their spouses, and dependent children from personally acquiring covered investments during the member’s period of service.
- Includes reporting requirements to ensure accountability and public visibility into the holdings of members’ blind trusts.
- House and Senate Ethics committees must make publicly available key documents, including a copy of each blind trust agreement, the schedule of assets transferred into each trust, and a description of any extensions granted or penalties imposed.
- Clarifies the treatment of inheritances. Inheritances that are covered investments must be divested or placed into a blind trust not later than 120 days after the receipt.
The two proposals come in response to recent revelations that at least 54 members of Congress have in some manner violated a law intended to prevent profiting on stock trades made as a result of having insider information not available to the general public.
Sen. Dianne Feinstein (D-Calif.), for example, reportedly was five months late in disclosing a large investment made by her husband. Similarly, Sen. Rand Paul (R-Ky.) was 16 months late in reporting that his wife had purchased stock in a firm that manufactures a treatment for the CCP virus, which causes COVID-19.
Speaker of the House Nancy Pelosi (D-Calif.), when asked about the 54 members, said she agrees they should comply with the reporting requirements of the Stop Trading on Congressional Knowledge (STOCK) Act of 2012, but she said she opposes barring stock trading by senators and representatives.
That law, which made such transactions illegal, was prompted by revelations by anti-corruption author Peter Schweizer in a best-selling book titled “Throw Them All Out: How Politicians and Their Friends Get Rich Off Insider Stock Tips, Land Deals, and Cronyism That Would Send the Rest of Us to Prison.”
Among the incumbent politicians exposed by Schweizer, president of the Government Accountability Institute, in his book was Pelosi. After Schweizer appeared on “60 Minutes” and elsewhere in the media, Congress quickly passed the STOCK law.
But critics continued to insist after the law was approved that STOCK wasn’t tough enough, especially after Congress quietly gutted many of its toughest transparency provisions in 2013.