July 11, 2024

Bipartisan Senate Plan Seeks to Ban Stock Trading for Congress and President

A bipartisan group of senators unveiled legislation on Wednesday that would ban members of Congress, including the president and vice president, from trading stocks. The effort is led by Sens. Gary Peters (D-Mich.), Jeff Merkley (D-Ore.), Josh Hawley (R-Mo.), and Jon Ossoff (D-Ga.).

"Americans deserve to have confidence that their federal elected officials are making decisions that are in the best interest of the American public and not in the interest of any personal finances," said Peters, chair of the Senate Homeland Security and Governmental Affairs Committee, at a press conference in Washington. Peters added that the Senate panel would take the "historic step" to consider the bill on July 24.

This marks the first formal consideration of such legislation by Congress.

Under the bill's framework, members of Congress would be "immediately" banned from trading stocks if the bill becomes law, according to Merkley. Starting in March 2027, the legislation would also prohibit lawmakers' spouses and dependent children from trading stocks.

Additionally, from that year onwards, the U.S. president, vice president, and all members of Congress would have to divest from any "covered investments."

However, Hawley expressed uncertainty about whether enough members would support the measure to get it passed. "Congress should not be here to make a buck," said the Missouri Republican on Capitol Hill. "There is no reason why members of Congress ought to be profiting off of the information that only they get."

Experts argue that the privileged information given to members of Congress provides an unfair advantage in investing, not available to the typical American.

In 2022, Ossoff joined Sen. Mark Kelly (D-Ariz.) in introducing a similar bill to prohibit congress members from trading stocks while in office. This move was followed by Hawley introducing a similar bill of his own.

Former House Speaker Nancy Pelosi (D-Calif.), whose husband Paul Pelosi is a wealthy investor known for frequent trades, only recently softened her opposition to such legislation. She previously dismissed ideas to prevent lawmakers from participating in the "free market economy." Pelosi's shift came after receiving a letter signed by 27 House members-two Republicans and 25 Democrats-urging a ban on Congress members trading or owning stocks. The letter was also addressed to then-Minority Leader Kevin McCarthy (R-Calif.).

In September last year, former Rep. Stephen Buyer (R-Ind.) was sentenced to nearly two years in prison after being convicted of four counts of securities fraud stemming from insider trading schemes. These alleged crimes occurred after Buyer had left Congress in 2011.

Former President Barack Obama signed the Stop Trading on Congressional Knowledge Act, known as the STOCK Act, on April 4, 2012. This law officially banned insider trading by members of Congress.

Meanwhile, it took until 2022 for the Federal Reserve to enact rules banning or restricting certain investment and trading activities by Fed officials. These rules were designed to "support public confidence in the impartiality and integrity of the Committee's work by guarding against even the appearance of any conflict of interest."

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