A bipartisan group of lawmakers introduced legislation on Tuesday to ban members of Congress and their spouses from owning and trading stocks in a bid to restore trust in the U.S. government.
Reps. Ken Buck (R-Colo.), Pramila Jayapal (D-Wash.), and Matt Rosendale (R-Mont.) introduced the “Bipartisan Ban on Congressional Stock Ownership Act,” which aims to prevent elected officials from using their positions for personal financial gain.
“Members of Congress receive information that the public does not, it is inappropriate for elected officials to then turn around and invest or buy stocks using that insider information,” Busk said in a statement. “The American people must have trust that Congress uses this information only to conduct official business, not benefit a stock portfolio.”
The legislation would ban U.S. lawmakers and their spouses from owning and trading individual stocks, bonds, commodities, futures, and other securities. This would include any interests in a hedge fund, a derivative, an option, or other complex investment vehicles.
It does not ban common, widely held funds, such as mutual funds and ETFs, as long as those funds do not present a conflict of interest and are diversified.
There has been increasing demand for reforms of the existing financial disclosure system following media investigations into potential conflicts of interest in trading by U.S. government officials and their relatives.
A recent analysis discovered that during a three-year period, almost 20 percent of members of Congress or their family members traded financial assets that demonstrated potential conflicts of interest. The Wall Street Journal reported that nearly one-third of Energy Department officials and their families owned stocks related to the agency’s work.
“Members of Congress are elected to serve the people, not our own financial interests,” said Jayapal. “As long as members and their spouses are allowed to trade individual stocks—the door to corruption remains open.”
The new bill creates a civil penalty that can reach $50,000 for every breach, which will be enforced by both the Department of Justice and the U.S. Office of Special Counsel.
Lawmakers would have a period of time to sell off their investments and meet the new requirements, and newly elected members would have a similar time frame from their swearing-in. The new regulations would also permit the delay of taxes on profits from investments that they and their spouses are required to sell off.
“It’s unacceptable that so many career politicians abuse their office to enrich themselves rather than putting the interests of the American people first,” said Rosendale, who said that ending insider trading is crucial to restoring public confidence in the U.S. government and its institutions.
According to the lawmakers’ joint media release, the legislation aims to restore public confidence in Congress and raise the ethical standards of elected officials.
Jayapal noted in a joint press release that “only two in ten American trust our government is working in their best interest.” She added that the measure is “long overdue” and a needed step to restore trust in Washington.
Jayapal is chair of the Congressional Progressive Caucus, and Buck and Rosendale are members of the conservative House Freedom Caucus. Jayapal previously introduced this bill in the previous Congress.
House Democrats proposed a similar measure last year, called the “Combatting Financial Conflicts of Interest in Government Act.”
Hawley’s Senate Bill
Earlier this month, Sen. Josh Hawley (R-Mo.) introduced a similar bill in the U.S. Senate to ban insider trading.
The “Eliminating Executive Branch Insider Trading Act” would prohibit the trading and holding of individual stocks by senior executive branch officials, many of whom have decision-making power that impacts the work being done in their respective agencies.
“Senior members of the Executive Branch—who have access to privileged information—shouldn’t be using it to get rich,” Hawley said in a statement on March 7. “The American people have entrusted these civil servants with implementing and enforcing laws.”
Hawley’s bill proposes to ban senior executive branch officials and their spouses from buying, selling, or shorting individual stocks during their time in office. The measure would also apply to high-level civilian and military officials, as well as the president and vice president.
Hawley previously introduced yet another similar bill called the “PELOSI Act.” This measure would mandate that members who breach the rules return their profits to the American public.