Congress Contemplates Banning Members From Trading Stocks 

WASHINGTON — House Speaker Nancy Pelosi, D-Calif., said on Wednesday she would support revisions to legislation banning members of Congress from trading individual stocks.

Pelosi had at first resisted the push for a congressional stock ban as politically vulnerable Democrats called for action on the issue. She added that plans going forward to prohibit lawmakers from buying and selling individual stocks should include the same limitations for the judicial branch, particularly the Supreme Court.

“We have to tighten the fines on those who violate the STOCK Act, [as] it is not sufficient to deter behavior,” Pelosi said during a press conference on Wednesday. “It has to be governmentwide. We make a [financial] disclosure every year, and then, in addition to that, on a regular basis when there’s a stock transaction we report that. The judiciary has no recording. The Supreme Court has no disclosure. It has no reporting of stock transactions, and it makes important decisions every day.”

Pelosi characterized the sentiment behind the stock ban push as a “confidence issue,” and said action was underway on the issue. The STOCK Act, officially the Stop Trading on Congressional Knowledge Act of 2012, makes it illegal for congressional members to use nonpublic information for private profit through the stock market and compels them to publicly disclose stock and bond transactions within 45 days.

However, the standard penalty for not complying with the law is $200, and numerous lawmakers from both parties have failed to properly report their financial trades as required. Insider and other news organizations identified 55 members of Congress who failed to properly disclose stock transactions to some extent.

Disclosure provisions of the STOCK Act were weakened one year after its passage when both chambers passed an amendment to the law using unanimous consent without any hearings or debate. The modification to the STOCK Act, signed by then-President Barack Obama in April 2013, repealed a requirement of the bill that obligated high-ranking government officials to post their financial information on a publicly viewable online database.

While the law’s reporting requirements still apply to the president, vice president, members of Congress and congressional candidates, public sector employees are not subject to the requirements.

The disclosure provisions were repealed after Congress tasked the National Academy of Public Administration to study its implications, which contended it endangered the safety of government employees abroad and made the attraction and retainment of employees in the public sector more difficult.

“I believe this is an important issue that Congress should address, and it’s something that has clearly raised interest from both sides of the aisle over the past few weeks,” Senate Majority Leader Chuck Schumer, D-N.Y., said in remarks from the Senate floor on Wednesday. “As I said yesterday, there are a number of senators with various proposals, and I have asked my Democratic colleagues to come together and come up with a single bill this chamber can work on.”

Schumer continued, “I hope we can pass something, and I want to encourage my colleagues on the Democratic side to reach out across the aisle. Some of the proposals — we have a whole bunch — have bipartisan support. So, this is something that the Senate should address.”

While revising the STOCK Act remains the most likely course of action, several other proposals have cropped up as the issue garners wider national focus. Sens. Elizabeth Warren, D-Mass., and Steve Daines, R-Mont., are working together to introduce a bill prohibiting stock trading by members of Congress and their spouses, while Rep. Andy Kim, D-N.J., announced a bill on Wednesday that would set one standard across all three branches of the federal government prohibiting ownership of individual stocks.

In January, 27 lawmakers signed a letter addressed to Pelosi and House Minority Leader Kevin McCarthy, R-Calif., calling the STOCK Act insufficient at preventing lawmakers from trading on nonpublic information. That letter, signed by 25 Democrats and two Republicans, cited suspicious trading activity from several members of Congress in the early days of the COVID-19 pandemic.

“The American people have made it clear that they are concerned about corruption in our government and this should be a top priority for lawmakers,” Dylan Hedtler-Gaudette, government affairs manager at the Project On Government Oversight, said in a written statement. “Whether it is stock trading that looks like insider trading by government officials and their spouses or the corrupting effects of lobbying by former policymakers, these issues undermine the public’s trust in government.” 

Reece can be reached at [email protected]