There is growing momentum in Congress to limit elected officials’ ability to buy and sell stocks while they serve in public office. Government watchdogs have long called for such a ban, but it took on new life after reports that several lawmakers may have profited from stock sales during the COVID-19 pandemic that could have been influenced by intelligence briefings.
For example, Sen. Richard Burr (R-N.C.) was investigated by the U.S. Department of Justice (DOJ) for stock trades he made shortly after he was briefed about COVID-19 in early 2020. Burr unloaded as much as $1.7 million of stocks following the briefing. Ultimately DOJ did not charge him, but he did step down as chairman of the Senate Intelligence Committee.
The DOJ also investigated Sens. Kelly Loeffler (R-Ga.), Dianne Feinstein (D-Calif.) and James Inhofe (R-Okla.) for similar stock trades made around the beginning of the pandemic, but none was charged. Members of Congress are legally restricted from buying and selling stocks based on private information they may receive as part of their job under the STOCK Act of 2012. That bill, which passed with bipartisan support, also requires members and their spouses to disclose when they buy and sell stocks within 45 days of a transaction.
Failure to report a transaction is punishable with a $200 fine, which many argue is not enough to prevent lawmakers from profiting off their intelligence access. In March 2021, a bipartisan group of lawmakers introduced the Ban Conflicted Trading Act, which would restrict members of Congress and senior staff members — who may also have access to early intelligence that could affect the stock market — from buying or selling stocks. It would also bar lawmakers and senior staff from serving on corporate boards while in office.
“Members of Congress serve the American people, not their stock portfolios,” Sen. Sherrod Brown (D-Ohio) said in a statement. “Elected officials have access to nonpublic information that can affect individual companies and entire industries. There must be more accountability and transparency to prevent members from using this information and abusing their positions for personal gain.”
The bill was jointly introduced by Brown, Sens. Jeff Merkley (D-Ore.) and Raphael Warnock (D-Ga.), and Reps. Raja Krishnamoorthi (D-Ill.), Alexandria Ocasio-Cortez (D-N.Y.), Joe Neguse (D-Colo.), Matt Gaetz (R-Fla.) and Michael Cloud (R-Texas). Public opinion polls suggest that the majority of Americans also support banning Congress members from buying or selling stock while in office. A 2021 poll from left-leaning Data for Progress found that 67% of Americans would support such a bill.
House Speaker Nancy Pelosi (D-Calif.), however, has come out against the ban, especially one that would prevent lawmakers’ family members from trading. Pelosi’s husband, Paul Pelosi, is an avid stock trader, and his investment moves are closely followed by other investors. His trades have even inspired viral TikTok memes among young investors; one told NPR in an interview that “if you can’t beat them, join them.” In December, Pelosi told reporters that America has a “free-market economy” and that lawmakers “should be able to participate in that.” Amid criticism, she later reversed course, however, stating that while she doesn’t believe that prohibiting members and their families from trading is necessary — “I have great confidence in the integrity of my members,” she told reporters in January — she would support advancing a ban.
House Minority Leader Kevin McCarthy (R-Calif.), who could become speaker if Republicans take the House this fall, has openly supported a ban. “I cannot imagine being a speaker of the House with the power of what can come before committee … and what can come to the floor, and trading millions of dollars worth of options,” McCarthy told NPR. “I just don’t think the American people think that’s right.”
Another option is to require members of Congress and their family members to place their assets in a blind trust while they are in office, which has been proposed in a bill spearheaded by Sens. Jon Ossoff (D-Ga.) and Mark Kelly (D-Ariz.). Under the pair’s Ban Congressional Stock Trading Act, members who violate the blind trust requirement would be fined their entire congressional salary. Given bipartisan support as well as the support of most Americans, a bill restricting Congress members’ trading could gain traction in 2022 ahead of the midterm elections.
For background, see the “Insider Trading Bill” article in the March 2012 issue of Congressional Digest.
