A bipartisan group of lawmakers introduced a bill on Tuesday that seeks to ban members of Congress from owning and trading stocks, the latest piece of legislation put forward in the effort to enact a stock trading ban for Congress.
A number of lawmakers from both parties and chambers introduced legislation in the last Congress to ban members from trading stocks while in office, but none of the proposed measures passed. The effort gained steam after news surfaced that several lawmakers had violated existing laws meant to prevent conflicts of interest when it comes to investing.
The House came close to holding a vote on legislation barring lawmakers from trading stocks in September 2022, but Democratic leadership ultimately scrapped those plans, saying there was not enough time to study the proposal.
The decision angered some lawmakers who had hoped to vote on the legislation — which is popular among voters — ahead of the midterm elections.
The newest measure — introduced by Reps. Pramila Jayapal (D-Wash.), Matt Rosendale (R-Mont.) and Ken Buck (R-Colo.) — would prohibit lawmakers and their spouses from owning or trading individual stocks, commodities, futures and other securities, including interests in hedge funds, derivatives, options or another “complex investment vehicle.”
The ban would not, however, extend to “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,” according to the lawmakers.
“Members of Congress are elected to serve the people, not our own financial interests. As long as members and their spouses are allowed to trade individual stocks – the door to corruption remains open,” Jayapal said in a statement. “This legislation is a long overdue, necessary step to raise the ethical standards of Congress and restore the people’s trust in our work.”
“We’ve made strides to ensure that Congress returned to an honest and properly functioning legislative body – ending insider trading by Members is another crucial step that will restore public confidence in our institutions,” Rosendale said in a statement.
Lawmakers would be given a “transition period” to divest their holdings under the bill, and newly elected members of Congress would be afforded a similar period once they are sworn in. Additionally, the legislation “allows deferral of taxation on gains from investments that they and their spouses are forced to divest.”
It would also set a civil penalty of up to $50,000 for any violations of the terms. Jayapal introduced the measure in the last Congress.
“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,” Buck 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.”
Other measures have also been introduced in the current session, but Jayapal, Rosendale and Buck said their bill — titled the Bipartisan Ban on Congressional Stock Ownership Act — “goes beyond other proposals to ban stock trading in many ways.”
In January, Reps. Abigail Spanberger (D-Va.) and Chip Roy (R-Texas) reintroduced the Trust in Congress Act, which would require members of Congress, their spouses and dependent children place stock investments into a qualified blind trust, where they must remain until 180 days after the end of their time in congressional office.
Also that month, Sen. Josh Hawley (R-Mo.) introduced the Preventing Elected Leaders from Owning Securities and Investments Act — or the PELOSI Act — which would prohibit members of Congress and their spouses from trading and owning stocks.