Bipartisan Senate Group Proposes Ban on Congressional Stock Trading

Members of Congress and their families face stiff penalties for stock trading, according to new legislation released Wednesday by a group of bipartisan senators.

The bill, introduced by Senators Jon Ossoff (D-Ga.), Gary Peters (D-Mich.), Jeff Merkley (D-Ore.) and Josh Hawley (R-Mo.), would ban members of Congress from buying and selling stocks and certain other investments, and impose similar restrictions on the spouses and dependent children of lawmakers beginning in 2027.

Members of Congress and the president and vice president would also have to divest certain investments before 2027.

Lawmakers face a fine equal to their monthly salary or 10 percent of the value of each improper investment if they violate the new rules.

The Homeland Security and Governmental Affairs Committee will vote on July 24 to send the legislation to the Senate, Chairman Peters announced Wednesday.

“I believe Americans should be able to trust that their elected federal representatives are making decisions that are in the best interest of the American public and not in the best interest of their personal finances and financial decisions,” Peters said.

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Lawmakers are already prohibited from using information gleaned from confidential briefings to make investments. And members must publicly disclose the stocks they buy and sell. But the fine for such a violation is $200, a mere fraction of the $174,000 salaries most members of Congress receive.

And lawmakers are so active in the stock market that investment products have been launched that allow ordinary investors to imitate the trades of members of Congress.

Under Wednesday’s legislation, members of Congress would still be able to invest in mutual funds or pooled securities investments such as exchange-traded funds, also known as ETFs.

“People have increasing access to sensitive nonpublic information when they’re in government. Reducing those conflicts of interest is important, but it doesn’t prevent them from investing in the market,” said Virginia Canter, chief ethics counsel at the government watchdog group Citizens for Responsibility and Ethics in Washington.

Previous attempts by both parties to ban or restrict congressional stock trading have failed. Then-House Speaker Nancy Pelosi (D-Calif.) refused to bring legislation to the House floor in 2022, saying the measure didn’t have enough votes to pass. But she also opposed the measure herself, and her husband, Paul Pelosi, is a highly successful investor.

“We are a free market economy,” Pelosi said in 2022. “They [members of Congress] “They should be able to participate in that.”

The former speaker has long maintained that she does not own any shares and has no knowledge of or involvement in her husband’s investments.

“Let’s call things by their name,” Hawley told reporters Wednesday. “There are many members who do not want to ban stock trading.”

Lawmakers who have been scrutinized over their stock trading in recent years have not suffered many consequences.

Rep. Pat Fallon (R-Tex.), who failed to timely disclose 122 transactions worth between $9 million and $21 million in 2021, paid $600 in late fees and corrected the records, though he refused to cooperate with an investigation conducted by the Office of Congressional Ethics.

The Senate Select Committee on Ethics has not disciplined a senator in more than 15 years, even after a stock-trading scandal roiled the upper chamber. Then-Senators Richard Burr (R-N.C.), Dianne Feinstein (D-Calif.), James M. Inhofe (R-Okla.) and Kelly Loeffler (R-Ga.) came under scrutiny in early 2020 after dumping large stock holdings ahead of the coronavirus-induced market crash. Neither the Senate Ethics Committee nor the Justice Department, whose investigators launched probes into the stock sales, have filed charges.

The “clear exoneration by the Department of Justice confirms what Senator Loeffler has said all along: She did nothing wrong,” a Loeffler spokesperson said at the conclusion of the investigation, adding that “she and her husband acted completely appropriately and followed both the letter and spirit of the law.”

The bill’s sponsors said Wednesday they hoped Senate Majority Leader Charles E. Schumer (D-N.Y.) would bring the measure to the full chamber for a vote in the coming months. Leadership in the Republican-controlled House has also signaled potential interest in a stock trading ban.

But the legislation could face greater obstacles in the Senate, where 60 votes would be needed to overcome a potential filibuster. Hawley said he was confident other Republicans would support the measure.

“Quite a few of my Republican colleagues campaigned in 2018, 2020, 2022 on a ban on stock trading. It was part of their race. They said they would do it, they promised to do it,” Hawley said. “I hope and expect that there will be a number of Republicans — I think it would be hard to explain otherwise … who would support this.”

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