Sen. Jeff Merkley (D-Ore.) has proposed an act that  would ban members of Congress, the vice president,  the president and their immediate family members from  owning or trading stocks, securities, commodities, futures, options, trusts and similar assets.  

The Ending Trading and Holdings in Congressional  Stocks (ETHICS) Act (S. 1171) would prevent the not ed elected officials from trading or holding stocks from  the time they take office until 90 days after they leave  but would still allow them to hold mutual funds and ex change-traded funds. 

The act would offer members of Congress a 90-day  divestiture period to sell their current holdings. If they  fail to do so, the penalty would be 10% of the value of  their stocks or a month’s pay, whichever is higher. It also  would require members to report federal benefits, such as loans, contracts, grants and payments.  

On July 24, the Senate Committee on Homeland Security and Governmental Affairs reported an amended  version of the bill to the Senate floor with 22 bipartisan  co-sponsors.  

“This is the first time that a Senate committee is marking up legislation to tackle this issue,” said Sen. Gary  Peters (D-Mich.), committee chair. 

Recent polling shows that more than 85% of voters  across the political spectrum support banning members  of Congress from trading individual stocks. “If you want  to serve in Congress, don’t come here to serve your portfolio, come here to serve the people,” Merkley said in an  interview with NPR.  

Sen. Josh Hawley (R-Mo.) echoed that sentiment,  saying, “The truth is Congress should not be here to make  a buck. Congress should be here to serve the American people.” 

Former Speaker of the House Nancy Pelosi (D-Calif.), whose husband is an active trader, opposed earlier  reforms but changed her position near the 2022 midterms.  

She is not alone. Merkley acknowledged that members of Congress have concerns that the bill also covers  their families. Sen. Mitt Romney (R-Utah) criticized the  bill’s divestiture requirement in particular. 

“Have you thought about Donald Trump, for in stance?” Romney said. “Under this bill, he couldn’t be come president. He’d have to sell all of his Truth Social stock. He’d have to sell all of his private investments.”

Romney called the act a solution looking for a problem,  pointing out that insider trading is already illegal. There have been efforts to limit insider trading in  the past. The Stop Trading on Congressional Knowledge  (STOCK) Act, which became law in 2012, targets the use  of nonpublic information for personal gain and requires  members of Congress and aides to report trades within  30 to 45 days.  

But last year, Business Insider reported that 78 members of Congress had violated the law and faced only  minimal fines. Experts say the law’s enforcement mechanism is weak. 

Meanwhile, there is observable overlap between  elected officials’ work and their stock trades. The New  York Times reported that 97 members of Congress made  trades in companies influenced by committees on which  they serve. Several members of Congress reportedly made  large profits after trading financial services stocks before  major bank failures. Some senators also were accused of  dumping stocks after a congressional COVID-19 briefing. 

The Campaign Legal Center, a nonpartisan group that  advocates for every eligible person to vote, has urged the  Senate to advance the bill.  

“By virtue of their positions, members of Congress,  the president and the vice president are oftentimes privy  to information that is unavailable to the general public,”  said Kedric Payne, the center’s vice president, general  counsel and senior director of ethics. “Allowing them to  engage in stock trading risks fostering an environment  where conflicts of interest among lawmakers lead to the  deterioration of public trust.”  

The legal group noted that in the 117th Congress,  congressional stock transactions exceeded $630 million.  A recent investigation by Business Insider revealed that  nearly 20% of those members failed to disclose their stock  trades in a timely manner. 

The National Taxpayers Union also supports the act  but recommends including a provision allowing elected  officials to place their assets in a qualified blind trust.  

They argue that without such a provision, qualified  candidates — particularly business owners — may be  discouraged from running for office.  

In an interview, Sen. Merkley said blind trusts are  complicated. Thus, leaving them out kept the bill clear  and simple.