Bipartisan bill would ban lawmakers from buying and selling stocks
A new bipartisan bill backed by more than a dozen lawmakers would ban members of Congress from trading individual stocks.
Senate Banking Committee Chairman Sherrod Brown (D., Ohio.), Sen. Jeff Merkley (D., Ore.) and Sen. Rafael Warnock (D., Ga.) introduced the bill in the Senate on Wednesday.
Several Democratic lawmakers —including Rep. Alexandria Ocasio-Cortez (D., N.Y.), Rep. Raja Krishnamoorthi (D., Ill.) — along with Republicans Rep. Matt Gaetz (R., Fla.) and Rep. Michael Cloud (R., Texas) are pushing the bill in the House.
The Ban Conflicting Trading Act would prohibit members of Congress and senior congressional staff from buying or selling individual stocks and other investments. It would also keep them from serving on corporate boards while in office.
"A lot of members of Congress are still buying or selling individual stocks, and if it isn't a reality, there's a very strong appearance of basically trading based on non-public information," said Krishnamoorthi in an interview with Yahoo Finance Live.
The bill would require new members to sell individual holdings within six months of their election and current lawmakers would have to sell their stocks within six months of the bill's enactment. If they don't want to sell, current lawmakers could hold their investments while in office (with no option to trade until they leave office) — or transfer them to a blind trust.
Running to ban members of Congress from trading stocks 🏃🏽♀️🏃🏽♀️🏃🏽♀️
We’ll get ‘em next time @CongressmanRaja & @JoeNeguse! https://t.co/r1YbQRihlM
— Alexandria Ocasio-Cortez (@AOC) March 3, 2021
“As elected representatives, we each have a constitutional obligation to honor the public trust we have been given. Members of Congress should not be permitted to abuse the role in order to make financial gains," said Cloud in a statement.
The bill's backers argue lawmakers and senior staffers have access to to advance notice of investigations, hearings and legislation that could impact stock prices. Last year, several senators came under fire for selling stock ahead of the coronavirus-related downturn. The Department of Justice investigated those senators and ultimately decided not to pursue any charges.
The STOCK Act, passed during the Obama administration, explicitly forbids members of Congress from trading on non-public information — but the new bill would hold lawmakers to a higher standard.
"One of the reasons folks are routinely cleared is because the law [the STOCK Act]... has such a high threshold of what is required in order to establish intent with regard to why people traded their stock, that it's nearly impossible to find people guilty," said Krishnamoorthi.
Though lawmakers have tried to pass bills to ban lawmakers from trading in the past, Krishnamoorthi said he's optimistic now that the effort has bipartisan support. He also argues Americans are becoming more aware of the issue. Krishnamoorthi pointed to a Data for Progress poll that found 67% of Americans support banning lawmakers from holding individual stocks.
"I think they're demanding we make these changes," he said.
If the bill becomes law, lawmakers could still hold diversified mutual funds or exchange-traded funds.
Jessica Smith is chief political correspondent for Yahoo Finance, based in Washington, D.C. Follow her on Twitter at @JessicaASmith8.
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