Members of Congress and their families would face stiff penalties for trading stocks under new legislation released Wednesday by a bipartisan group of senators.
The bill, introduced by Sens. Jon Ossoff (D-Ga.), Gary Peters (D-Mich.), Jeff Merkley (D-Ore.) and Josh Hawley (R-Mo.), would bar members of Congress from buying and selling stocks and certain other investments, and impose similar restrictions on lawmakers’ spouses and dependent children by 2027.
Members of Congress and the president and vice president would also have to divest from certain investments by 2027.
Lawmakers would face a fine worth their monthly salary or 10 percent of the value of each improper investment if they violated the new rules.
The Homeland Security and Governmental Affairs Committee will vote to advance the legislation to the Senate floor on July 24, Peters, the committee’s chair, announced Wednesday.
“I believe that Americans deserve to have confidence that their federal elected officials are making decisions that are in the best interest of the American public and are not in the interest of any personal finances and financial decisions that they make,” Peters said.
Lawmakers are already prohibited from using information gained from confidential briefings to make investments. And members must publicly disclose the stocks they buy and sell. But the penalty for such a violation is $200, hardly a fraction of the $174,000 salary that most members of Congress receive.
And lawmakers have been so active on the stock market that investment products have launched that allow ordinary investors to mimic the trades made by members of Congress.
Under Wednesday’s legislation, members of Congress could still invest in mutual funds or pooled securities investments such as exchange-traded funds, also known as ETFs.
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“People have more and more access to sensitive nonpublic information when they’re in the government. It’s important to alleviate those conflicts of interest, but it doesn’t prevent them from being invested in the market,” said Virginia Canter, chief ethics counsel at the government watchdog group Citizens for Responsibility and Ethics in Washington.
Previous bipartisan pushes to ban or restrict congressional stock trading have failed. Then-House Speaker Nancy Pelosi (D-Calif.) in 2022 declined to bring legislation up for a vote in the House, saying the measure lacked the votes to pass. But she also opposed the measure herself, and her husband, Paul Pelosi, is a very successful investor.
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“We’re a free-market economy,” Pelosi said in 2022. “They [members of Congress] should be able to participate in that.”
The former speaker has long maintained that she does not personally own any stock and has no knowledge of or involvement with her husband’s investments.
“Let’s just call a spade a spade,” Hawley told reporters Wednesday. “There are a lot of members who do not want to ban stock trading.”
Lawmakers who have been scrutinized over their stock trades in recent years have not faced many consequences.
Rep. Pat Fallon (R-Tex.), who failed to disclose 122 transactions valued between $9 million and $21 million in 2021 in a timely manner, paid $600 in late-filing fees and corrected the record, though he refused to cooperate with a review conducted by the Office of Congressional Ethics.
The Senate Select Committee on Ethics has not issued a disciplinary sanction against a senator in over 15 years, even after a stock-trading scandal roiled the upper chamber. Then-Sens. Richard Burr (R-N.C.), Dianne Feinstein (D-Calif.), James M. Inhofe (R-Okla.) and Kelly Loeffler (R-Ga.) came under scrutiny at the start of 2020 after they dumped vast stock holdings ahead of the coronavirus-induced market plunge. Neither the Senate Ethics Committee nor the Justice Department, whose investigators launched probes into the stock sales, pursued charges.
The “clear exoneration by the Department of Justice affirms what Senator Loeffler has said all along — she did nothing wrong,” a spokesperson for Loeffler said at the conclusion of the investigation, adding that “she and her husband acted entirely appropriately and observed both the letter and the spirit of the law.”
The bill sponsors Wednesday said they were hopeful Senate Majority Leader Charles E. Schumer (D-N.Y.) would bring the measure for a vote before the full chamber in the coming months. Leadership in the Republican-controlled House has also signaled potential interest in a stock-trading ban.
But the legislation could face larger hurdles in the Senate, where it would need 60 votes to overcome a potential filibuster. Hawley said he was confident other Republicans would support the measure.
“Quite a number of my Republican colleagues ran in 2018, 2020, 2022 on banning stock trading. It was a part of their races. They said they would do it, they pledged to do it,” Hawley said. “I would hope and anticipate and expect that there will be a number of Republicans — I think it’d be kind of hard to explain otherwise … who would support this.”
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