The House of Representatives passed a bill on July 22 that limits members of Congress from trading stocks.
The tally of the Stop Insider Trading Act was 232–198, with more than a dozen Democrats crossing the aisle to vote for the legislation. It now goes to the Senate, where its prospects are uncertain.
Introduced by Rep. Bryan Steil (R-Wis.), the bill would not prohibit members of Congress or their family members from selling stocks they currently hold.
A member of Congress would have between seven and 14 days to file a public notice of intent to sell with the secretary of the Senate or the clerk of the House of Representatives, depending on which chamber he is in, when he, his spouse, or his dependent sells a covered investment.
The legislation would not apply to an interest in a widely held investment fund or certain investments held in a trust, but it would pertain to investments such as a security issued by a publicly traded company.
The clerk or secretary would publish this notice online and would withdraw it if the individual were to decide that he no longer wants to sell the covered investment.
If an individual covered under the bill trades stocks, a fee would apply. If the individual purchases a covered investment, he would be required to sell that investment.
The fee for trading would equal either $2,000 or 10 percent of the transaction value, whichever is greater, plus any net gain realized from the transaction during a specified period.
The fees would be deposited in the general fund of the Treasury. They could not come from a member’s representational allowance or a senator’s official personnel and office expense account. House members have a representational allowance for their offices to cover expenses such as salaries.
Spouses and dependents would have exceptions such as making a stock trade on behalf of another individual.
Ahead of the vote, Democrats expressed opposition to the Stop Insider Trading Act.
Rep. Joe Morelle (D-N.Y.) in January criticized the bill as having loopholes, since it would allow lawmakers and others covered under the measure to keep their existing holdings, use dividends to purchase additional shares, and permit spouses or dependents to trade on their behalf.
Rep. Pramila Jayapal (D-Wash.) told The Epoch Times that the bill would not actually prevent trading and therefore is weak.
“I think this is an attempt to say that they did something, but it allows members to continue to hold stocks,” she said. “It allows members to continue to sell stocks. It doesn’t prevent any of the conflicts of interest that we’ve seen, any of the insider trading that we’ve seen.”
In a joint statement on Jan. 12, Jayapal and Reps. Seth Magaziner (D-R.I.) and Alexandria Ocasio-Cortez (D-N.Y.) said: “While this bill prohibits members from buying new stocks, it does nothing to remove the conflict of interest that arises from owning or selling existing stocks.
“Members can still act on legislation, investigations, and briefings that directly influence the value of their stocks for personal benefit.”
Rep. Chip Roy (R-Texas), meanwhile, told reporters that “this is a giant step forward.”
“I would rather it be a little bit stronger, but it’s a good bill, good step forward that I’m proud to support, and I'll vote for [it],” he said.
Rep. Anna Paulina Luna (R-Fla.) posted on X on Jan. 12, “This is a win, but it should be noted that this would not have happened if individual members, both Democrats and Republicans, had not stepped forward to call this out on both sides.”
Rep. Kevin Kiley (I-Calif.), who caucuses with Republicans, told The Epoch Times that the bill is “a good first step.”
“I think that the vast majority of Americans support stopping members of Congress from trading stocks,” he said.
