Since early 2020, multiple events sparked renewed support for limiting stock trading among federal officials. In January 2020, after a closed briefing on COVID-19 and its economic effects, a group of senators including Richard Burr (R-NC), Kelly Loeffler (R-GA) and Diane Feinstein (D-CA) sold millions of dollars of stocks in sectors later affected by the Coronavirus while buying stocks in sectors bolstered by the Coronavirus, especially remote conferencing companies.
One year later, a five-month investigation released by Business Insider brought further concern, as it found that over 50 senators and nearly 200 federal officials violated various conflict-of-interest laws. It also concluded that lawmakers faced little punishment for doing so, with the most common penalty being a $200 fine.
As a result, federal lawmakers from both parties have introduced a total of six different bills restricting the ability to engage in trading stocks while serving in Congress. These bills all have some similarities. At the bare minimum, they ban members of Congress from trading or holding stocks while in office, requiring that they either divest their assets or manage them via an independent trust fund. They all grant a transition period of several months for newly elected members to adjust their finances as required.
The largest differences, however, arise in the types of assets covered—the severity of penalties if members violate the law and whether a member’s spouse or children fall under similar financial restrictions. In this case, the bills with the widest support from both sides of the aisle are the TRUST in Congress Act and the Ban Conflicted Trading Act, introduced by Representatives Abigail Spanberger (D-VA) and Raja Krishnamoorthi (D-IL), respectively. With such a legislative frenzy, it has become clear that the biggest challenge to stop insider trading in Congress will be decided on which law is passed.
Sources
“'Conflicted Congress': Key Findings From Insider's Five-Month Investigation.” Business Insider, 17 Dec. 2021, https://www.businessinsider.com/conflicted-congress-key-findings-stock-act-finances-investing-2021-12. Accessed 3 July 2023.
“H.R.1579 - 117th Congress (2021-2022): Ban Conflicted Trading Act | Congress.gov | Library of Congress.” Congress.gov, https://www.congress.gov/bill/117th-congress/house-bill/1579. Accessed 3 July 2023.
Ioanes, Ellen. “Congress is getting serious about banning stock trading by lawmakers.” Vox, 12 Feb. 2022, https://www.vox.com/2022/2/12/22930385/congress-bipartisan-stock-trading-ban-lawmakers-pelosi-schumer. Accessed 3 July 2023.
Kelly, Jack. “Senators Accused Of Insider Trading, Dumping Stocks After Coronavirus Briefing.” Forbes, 20 Mar. 2020, https://www.forbes.com/sites/jackkelly/2020/03/20/senators-accused-of-insider-trading-dumping-stocks-after-coronavirus-briefings/. Accessed 3 July 2023.
“Text - H.R.336 - 117th Congress (2021-2022): TRUST in Congress Act | Congress.gov | Library of Congress.” Congress.gov, https://www.congress.gov/bill/117th-congress/house-bill/336/text. Accessed 3 July 2023.
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