A bipartisan group of 20 U.S. senators has renewed efforts to ban members of Congress from trading stocks, aiming to close loopholes that allow lawmakers to profit from insider knowledge.
Proposal to Amend the STOCK Act
In a July 9 letter to House Speaker Mike Johnson and Democratic Leader Hakeem Jeffries, the senators proposed an amendment to the Stop Trading on Congressional Knowledge (STOCK) Act of 2012. This amendment would prohibit lawmakers from trading stocks, reflecting concerns that members of Congress have been profiting from non-public information.
Key Statements and Findings
“Congress should not be here to make a buck,” said Senator Josh Hawley at a press conference. “There is no reason why members of Congress ought to be profiting off of information that only they get and the rest of the American people don’t get.”
The senators highlighted that 97 lawmakers had traded stocks where their committee work had direct implications. On average, members of Congress outperformed the S&P 500 by 17.5%, raising ethical concerns.
A recent investigation revealed that one in seven sitting members of Congress violated the STOCK Act between 2021 and 2023. The proposed amendment aims to ban stock trading by sitting congresspeople within 90 days of the bill’s signing. Additionally, starting in March 2027, the ban would extend to the sitting President, Vice President, and the spouses and dependent children of all sitting Congress members.
Penalties and Enforcement
The proposed legislation would impose a fine of 10% of the value of the asset traded for violations, a significant increase from the current $250 penalty per infraction. “It is abundantly clear that more is needed to stop this type of behavior that is not only unethical but also undermines public trust in our democratic institutions,” the senators stated in their letter.
Senator Golden echoed this sentiment in a July 9 statement, emphasizing that Congress members should serve their constituents, not their financial interests. “Anyone who feels the same should have no problem voting for this common sense, long overdue step,” Golden said.
Background and Public Reaction
Efforts to ban congressional stock trading gained momentum following public disclosures of highly profitable trades by top lawmakers during the early days of the COVID-19 pandemic. Notably, Congresswoman Nancy Pelosi faced scrutiny after reports of her successful trading activity contributed to her net worth exceeding $250 million, despite an annual congressional salary of $193,000.
Pelosi’s trading activities have even inspired dedicated copy-trading and stock-picking services aimed at replicating her success.
