For quite a while now, pressure has been mounting on Capitol Hill to address concerns about lawmakers' trading activities with growing calls for Congress to limit its member's financial transactions. Senator Jon Ossoff, a Democrat from Georgia, introduced legislation in the past that required members of Congress along with their spouses and dependents, to place their assets in a blind trust. This move towards accountability gained bipartisan support with lawmakers recognizing the need to enhance public trust by eliminating doubts about their motivations.
A push for stricter regulations came due to controversies surrounding financial transactions conducted by lawmakers during the COVID-19 pandemic. Notable cases included Senators Dianne Feinstein and Jim Inhofe trades. in Addition, The Securities and Exchange Commission investigated back then whether stock sales made by Republican Senator Richard Burr before the lockdowns began in 2020 amounted to insider trading. However, the Justice Department dropped its investigation later on.
Capitol Trades, an organization that monitors lawmakers' disclosures, reported that members of Congress and their immediate families engaged in approximately $515 million worth of stock and asset transactions across 2021. Analysis by Capitol Trades revealed that the most active sectors for these trades were technology, energy, telecommunications and media. Representatives Josh Gottheimer, Ro Khanna and Scott Franklin were among the lawmakers with the highest levels of trading activity.
In an interview, Gottheimer acknowledged the need for lawmakers to refrain from directly participating in stock trading, while a spokeswoman for Mr. Khanna clarified that the stocks in question belonged to his wife and that he personally did not own or trade individual assets. Representative Franklin's trades also included joint transactions.
Representative Abigail Spanberger, a Democrat from Virginia, expressed her dismay regarding the allegations of insider trading within Congress. She joined forces with Republican Representative Chip Roy in proposing a bill that required lawmakers, their spouses, and dependents to utilize blind trusts while in office. Initially introduced in June 2020, the Trust in Congress Act garnered bipartisan support with 14 other lawmakers co-sponsoring it.
The Ban Conflicted Trading Act, led by Senator Jeff Merkley offered an alternative approach. It would prohibit buying and selling stocks while in office but allow lawmakers to retain their assets. Additionally, members could choose to divest within six months after their election. These proposed measures aimed to address conflicts of interest and enhance transparency.
While current laws prohibit lawmakers from engaging in insider trading, watchdog groups argue that the burden of proof is high. Spanberger noted that even legal financial holdings could present conflicts of interest. Business Insider's investigation revealed that 52 lawmakers violated these rules in the year 2021.