Some Lawmakers Push to Ban Stock Trading by Colleagues

The stock trades by federal judges and central bank officials came under intense scrutiny due to concerns over conflicts of interest and access to nonpublic information back in 2022. Just when this pressure was coming to a halt, attention shifted towards the Congress.

Democratic Senators Mark Kelly and Jon Ossoff introduced legislation that aimed to prohibit members of Congress, their spouses and dependent children from trading individual stocks. The proposed bill also required them to place their stock portfolios into a blind trust, a clause which was implemented by both senators themselves.

Sen. Kelly emphasized the responsibility that came with the influence and access to information that members of Congress possess. Currently, lawmakers are required to publicly file and disclose any financial transactions involving stocks, bonds, commodities and other securities within 45 days. However, there is extreme pressure with bipartisan support to push for tighter rules.

In the past, the trading activities of some lawmakers have raised quite a few concerns. During the Covid pandemic, the FBI has conducted investigations into several lawmakers who were reported to have sold stocks after attending meetings on the subject. The cases were eventually closed without any action taken.

The Senate bill, which allowed lawmakers to retain control over mutual fund holdings and other diversified products, lacked Republican co-sponsors and was not expected to be voted on soon back then. However, a similar bill with bipartisan support was introduced in the House by Reps. Abigail Spanberger and Chip Roy. 

Additional bills have been proposed to limit conflicts of interest. Additionally, the idea of banning lawmakers from trading individual stocks was supported by White House spokesman Brian Deese, who called it sensible and a way to restore public faith in institutions.

Critics of the proposed legislation argued that placing assets in a blind trust was costly and placed an undue financial burden on lawmakers. They also argued that existing laws already prohibited trading on insider information and required regular disclosures of trades.

According to data from market analysis firm 2iQ's Capitol Trades, 113 out of 533 members of the House and Senate reported trading activity in 2021. Lawmakers and their immediate families bought $267.4 million of assets and sold $363.5 million, with both figures lower than the previous year. Trading in stock options doubled in value in 2021 compared to 2020.

How Congress will proceed regarding the subject of politician trading remains to be witnessed, but when the time comes for a decision to be made, public interest should always be kept at the utmost priority.