In the last Congress, a number of politicians from both parties and chambers submitted legislation to prohibit members from trading stocks while they were in office, but none of the ideas were adopted. The campaign gained momentum after it was revealed that a number of politicians had broken the rules intended to prevent conflicts of interest when investing.
In September 2022, a vote on legislation prohibiting politicians from trading stocks came near to happening, but Democratic leadership ultimately decided against it, citing insufficient time to analyze the issue.
Some politicians were upset by the decision because they wanted to vote on the popular with voters legislation before the midterm elections.
Reps. Pramila Jayapal (D-Wash.), Matt Rosendale (R-Mont. ), and Ken Buck (R-Colo.) have introduced a new bill that would make it illegal for lawmakers and their spouses to own or trade individual stocks, commodities, futures, and other securities, including stakes in hedge funds, derivatives, options, or other "complex investment vehicles."
However, the MPs said that the restriction would not apply to "common, widely held funds, such as mutual funds and ETFs, as long as those funds do not constitute a conflict of interest and are diversified."
"Congressmen are elected to represent the interests of the people, not our own financial interests. The door to corruption remains open as long as members and their wives are permitted to sell individual equities, Jayapal said in a statement. "This legislation is a long overdue, essential move to improve Congress' ethical standards and win back the public's confidence in our work."
Ending insider trading by Members is another essential step that will restore public faith in our institutions, according to Rosendale. "We've made measures to ensuring that Congress reverted to an honest and properly functioning legislative body," Rosendale said in a statement.
The bill would grant lawmakers a "transition period" to sell their investments, and freshly elected members of Congress would be given a comparable window after taking office. The measure "allows deferment of taxation on gains from investments that they and their spouses are required to relinquish," according to the statute.
A civil fine of up to $50,000 would also be established for any infractions of the provisions. The proposal was made by Jayapal during the previous Congress.
"It is improper for elected officials to turn around and invest or buy stocks using that insider information," Buck said in a statement. Members of Congress receive information that the general public does not. The American people must believe that Congress will only utilize this information for official purposes and not to enhance their stock holdings.
In the current session, additional bills have also been submitted, however Jayapal, Rosendale, and Buck claimed their Bipartisan Ban on Congressional Stock Ownership Act "goes beyond prior ideas to outlaw stock trading in many areas."
The Trust in Congress Act, which would compel members of Congress, their spouses, and their dependent children to place stock assets into eligible blind trusts, was proposed in January by Representatives Abigail Spanberger (D-Va.) and Chip Roy (R-Texas).
The Stopping Elected Leaders from Owning Securities and Investments Act, also known as the PELOSI Act, was presented that same month by Rep. Josh Hawley (R-Mo. ), and it forbade members of Congress and their wives from trading in and owning stocks.
