ETHICS Act comes after over a year of collaboration and amid calls for government accountability
Tuesday, April 18, 2023
Washington, D.C. – Oregon’s Senator Jeff Merkley and Ohio’s Senator Sherrod Brown led 21 Senators today in introducing the Ending Trading and Holdings in Congressional Stocks (ETHICS) Act. This bill is bipartisan and bicameral, with Representatives Raja Krishnamoorthi (D-IL) and Michael Cloud (R-TX) leading the bill in the House. The ETHICS Act is new, comprehensive legislation that would prohibit members of Congress, their spouses and dependent children from abusing their positions for personal financial gain by owning or trading securities, commodities, or futures.
“Congressional stock trading is deeply corrupt. We are elected to serve the public, not our portfolios. And no member should vote on bills biased by the character of their holdings,” said Merkley, the ETHICS Act lead sponsor.
“It’s simple: members of Congress are supposed to serve the American people, not their stock portfolios,” said Brown. “Elected officials have access to private information that can affect individual companies and entire industries. We need more accountability and transparency to prevent members from abusing their positions for personal gain.”
“When Members of Congress trade in securities while making decisions affecting their value, there is an unavoidable potential conflict of interest,” said Krishnamoorthi. “The ETHICS Act is the most comprehensive legislation ever proposed to eliminate even the possibility of these conflicts of interest and ensure public servants put their constituents first by banning members and their immediate families from owning or trading stocks.”
“At a time when trust in public officials is so low, it’s more important than ever to do everything we can to restore the People’s confidence in their Government,” said Cloud. “I’m pleased to work with Congressman Krishnamoorthi introducing the ETHICS Act to set a new benchmark of accountability and transparency for Members of Congress around stock trading. If we want to restore faith in government, this bill is a good place to start.”
The ETHICS Act is cosponsored by Senators Kirsten Gillibrand (D-NY), Angus King (I-ME), Bernie Sanders (I-VT), Debbie Stabenow (D-MI), Jeanne Shaheen (D-NH), Tammy Duckworth (D-IL), Bob Casey (D-PA), Peter Welch (D-VT), Ben Ray Luján (D-NM), John Fetterman (D-PA), Mazie Hirono (D-HI), Catherine Cortez Masto (D-NV), Tammy Baldwin (D-WI), Chris Van Hollen (D-MD), Ben Cardin (D-MD), Jon Tester (D-MT), Martin Heinrich (D-NM), Tim Kaine (D-VA), and Richard Blumenthal (D-CT). In the House, the ETHICS Act is cosponsored by Alexandria Ocasio-Cortez (D-NY).
“The American people need to know that their elected leaders are putting their constituents’ interests—not their own financial interests—first. That is the job we were sent to Washington to do,” said Gillibrand. “The comprehensive ETHICS Act, which includes proposals from my STOCK Act 2.0, bars trusted public servants from trading individual stocks and would require elected officials to disclose when they receive a benefit of value from the government, and it penalizes them for failing to comply. I am proud to introduce this bill with my Democratic colleagues to help end these abuses and give Americans confidence that Congress is acting solely in the national interest.”
“Members of Congress are entrusted to fight for the interests of their constituents – not advance their own personal financial position. I’m proud to join my colleagues to introduce the ETHICS Act to prohibit Members of Congress and their direct family members from trading and holding stocks,” said Luján. “This legislation will help build trust between Congress and the millions of Americans who we represent.”
“The American people expect their representatives in Congress to serve the public’s interest, not their own,” said Baldwin. “This commonsense legislation will help stop corruption in Washington by preventing members of Congress from holding individual stocks, ensuring that every member is focused on delivering results for the people we work for, not themselves.”
“Members of Congress must be held to the highest ethical standards and remain transparent and accountable to the American people. I’m proud to help introduce the ETHICS Act to meet those requirements by ensuring members of Congress and their families are prohibited from using their positions of power and inside knowledge to personally profit from financial markets,” said Shaheen. “This legislation will send a strong message that elected officials are committed to upholding public trust and acting in the best interests of their communities. Serving in Congress is a public service, not an opportunity for financial enrichment.”
“I’m proud to support the Ending Trading and Holdings in Congressional Stocks (ETHICS) Act, which will increase accountability and transparency in government, and thank Senator Merkley for his leadership on this important issue,” said Welch.
“My focus is on?delivering for my state, our country, and the legacy we will leave our children and grandkids. The same should go for all members of Congress – who were elected to represent their constituents, not their personal investments,”?said Heinrich. “This legislation helps make sure that when a member of Congress is faced with making important policy decisions, their focus is on what’s good for their community and our country, first and only.”
“My colleagues and I in Congress were elected to look out for the best interests of our constituents, not our own financial interests—and the American people deserve to be confident that that is the case,”?said Duckworth.?“I’m proud to help introduce the?ETHICS Act?to help restore trust in our government as well as strengthen integrity and transparency in Washington.”
“Americans should have confidence that Members of Congress are acting in the public’s best interest,” said Hirono. “That’s why it is imperative that Members of Congress, their spouses, and dependent children are prevented from abusing their position for personal financial gain. By banning members of Congress from owning or trading securities, commodities, or futures, the ETHICS Act will help eliminate conflicts of interest and restore public trust in Congress. I’m glad to join Senator Merkley in introducing this important legislation and I’ll continue working to ensure all public officials are held to high ethical standards.”
“Americans deserve to know that their representatives in Congress’ top priority is the well-being of their constituents—not their own personal bottom lines,” said Kaine. “I support this effort to put commonsense limits in place to help make sure that’s the case.”
“Members of Congress have a responsibility to act in the best interest of the American people — not their personal financial portfolios. By removing any financial conflicts of interest and increasing transparency, Congress can better serve our constituents and uphold the public trust,” said Van Hollen.
“This commonsense legislation will bring accountability and transparency to Congress and ensure elected officials are serving their constituents – not their stock portfolios,” said Cortez Masto.
“Ethics matter. Members of Congress are public servants who should not be making a profit off of the official information we gain by doing our jobs,” said Cardin. “I’m proud to join my colleagues in increasing transparency and eliminating opportunities for abuse.”
According to the nonpartisan Campaign Legal Center, before the stock market was shaken by the onset of the global pandemic, dozens of House and Senate members made over a thousand financial transactions after receiving closed-door briefings. In 2022, Members of Congress made more than 12,700 individual trades, with dozens of members making above average gains as Wall Street saw its worst year since 2008. A 2022 New York Times investigation reported a fifth of all lawmakers trading in companies directly related to their work on a congressional committee. Even in a divided political climate, polling consistently shows that 70% of voters support banning members of Congress from holding individual stocks, including majorities of Democratic, Independent, and Republican voters.
The ETHICS Act would bar members of Congress, their spouses, and dependent children from owning or trading individual stocks, securities, commodities, or futures. Lawmakers often have advance notice of investigations, hearings, and legislation that can impact stock prices, or can move markets by supporting or enacting policy changes that affect specific companies or industries. The legislation gives several options to members of Congress who own covered assets, including divesting, diversifying into allowable assets—such as mutual funds—or placing assets into a Qualified Blind Trust (QBT). The ETHICS Act addresses concerns about Qualified Blind Trusts not being truly blind with new, enhanced provisions requiring divestiture of assets that go into the Qualified Blind Trust. The ETHICS Act strengthens congressional ethics, bans conflicts of interest and the appearance of conflicts of interest, and increases transparency in Congress.
The ETHICS Act includes strong penalties with enforcement by respective Congressional Ethics Offices. If Members or their covered family members continue to hold or trade in violation of the Act, the fine will be at least the value of the Members’ monthly pay. The ETHICS Act also expands on disclosure requirements under 2012’s Stop Trading on Congressional Knowledge (STOCK) Act.
Full text of the legislation as introduced in the Senate is available here and a summary is available here.
The ETHICS Act enjoys wide support from government ethics leaders and other groups across the political spectrum, including: Project on Government Oversight (POGO), Citizens for Responsibility and Ethics in Washington (CREW), Public Citizen, Progressive Change Campaign Committee (PCCC), MoveOn, National Taxpayers Union (NTU), Take On Wall Street, Stand Up America, Indivisible, RepresentUs, 20/20 Vision, Campaign Legal Center, Issue One, Our Revolution, and Taxpayers for Common Sense.
“The fact that members of Congress still trade stocks and other similar investment assets is an ethical travesty that fuels increasing public distrust in government,” said Dylan Hedtler-Gaudette, Senior Government Affairs Manager at the Project On Government Oversight. “Banning this practice and cleaning up the congressional ethics system is a vital and long overdue reform. This is why Senator Merkley and his colleagues should be applauded for their leadership in their efforts to solve this problem by introducing the ETHICS Act, the strongest and most comprehensive congressional stock trading legislation to date. POGO is glad to endorse the bill and we call on Senate leadership to move it swiftly to the floor for a vote.”
“Congress is facing its worst crisis of public confidence in generations. Members of Congress owning and trading stock in companies that they regulate undermines the public’s perception of Congress, and contributes to a growing public sense that their government does not operate on their behalf,” said Debra Perlin, Policy Director of Citizens for Responsibility and Ethics in Washington (CREW). “The Ending Trading and Holdings in Congressional Stocks (ETHICS) Act is precisely the bold and decisive action this worsening crisis demands. By prohibiting members, their spouses, and their dependent children from owning or trading individual stocks or other financial instruments, the ETHICS Act would show that in our democracy the needs of the public, not members of Congress’s stock portfolios, come first. CREW strongly endorses this legislation and calls on Congress to send it to President Biden’s desk without delay.”
“Banning Congressional stock trading and ownership is hugely popular among the American people, and we strongly support the ETHICS Act,” said Emma Lydon, Managing Director of P Street, the government affairs sister organization of the Progressive Change Campaign Committee. “Passing this legislation will help restore public trust in our democracy and ensure that members of Congress do not place their personal financial interests above the interests of the people they serve. Every Senator should publicly state whether they support comprehensive legislation to ban congressional insider trading and financial conflicts of interest in the legislative branch.”
“We applaud Sen. Merkley and others in the Senate for introducing the ETHICS Act. With confidence in our democratic systems waning, our elected officials need to do more to shore up trust again. Banning stock trading among U.S. lawmakers is a no-brainer. This is a commonsense way to help constituents believe that their representatives were elected to serve in the public interest, and not in the pursuit of profiting off inside information entrusted to them while in office,” said MoveOn Executive Director Rahna Epting.
“Members of Congress should not be able to trade individual stocks during their time of service, given the disproportionate access to market-moving information lawmakers enjoy and their unique ability to affect markets with their legislative activity. National Taxpayers Union is proud to endorse the ETHICS Act, we applaud Senator Merkley for his leadership, and we encourage Congress to enact legislation that bans members of Congress from stock trading this year,” said Andrew Lautz, Director of Federal Policy, National Taxpayers Union.
“Members of Congress are elected to represent their constituents, not their personal financial portfolios,” said Andrew O’Neill, Legislative Director for Indivisible. “Unfortunately, it’s clear we need much stronger safeguards in place to protect against self-dealing and corruption, or even the appearance of it. Indivisible is grateful to Senator Merkley and the cosponsors of The ETHICS Act for fighting to strengthen our democracy. Congress must eliminate the unavoidable conflict of interest that occurs when Members of Congress or their families are actively trading stocks while in office.”
“Our existing laws don’t do enough to stop members of Congress from engaging in insider trading or prevent conflicts of interest between their responsibility to the public and their personal financial gain,” said Brett Edkins, Managing Director of Policy and Political Affairs at Stand Up America. “Banning members and families from trading securities would give the American people the certainty that their representatives are looking out for our interests and not how a particular policy might affect their financial portfolio. We applaud Senator Merkley for his leadership on this issue, and encourage the Senate to coalesce behind the ETHICS Act.”
“Voters have a right to know that their elected officials are focused on the needs of the public instead of their own personal wealth. Members of Congress will remain under a cloud of suspicion if they continue to take official actions that appear to benefit their stock holdings. The ETHICS Act helps to remove this dark cloud and rebuild public trust by banning Members of Congress from owning individual company stocks,” said Kedric Payne, Vice President, General Counsel, & Senior Director, Ethics, Campaign Legal Center.
“In order for our government to function, voters need to trust that lawmakers have their best interests at heart. Right now, we all know the trust just isn’t there. One major reason why is that we continue to allow members of Congress to trade stocks while in office – with little oversight and accountability. Until our elected officials get serious about cracking down on real or perceived conflicts of interest, the crisis of confidence will only get worse,” said RepresentUs CEO Joshua Graham Lynn. “We’re proud to endorse the ETHICS Act, and want to thank Sen. Merkley and other bill sponsors for putting it forward. A stock trading ban has overwhelming bipartisan support among the public. Passing it is a no-brainer and would be a first step in rebuilding trust.”
“It’s just plain wrong that members of Congress can trade stocks while they’re receiving non-public information. It erodes the public’s trust in their elected representatives in Washington. Even the perception of corruption is worth guarding against as much as corruption itself. That’s why Congress should ban members and their family members from trading or owning stocks while in office. It’s a commonsense fix that members on both sides of the aisle support. It’s time to get this done,” said Elise Wirkus, Issue One Legislative Director.
“The allegations of congressional inside trading that arose when some members of Congress dumped their stocks after a confidential briefing on the likely economic impact of the pandemic made it very clear that disclosure is not enough. The ETHICS Act would take the extra step and ban stock trading activity by members and their spouses. This measure would be good for both Congress and the public’s confidence in Congress. As seen during the pandemic, even the appearance of congressional insider trading can pose political risks for members of Congress. And an outright ban on stock trading activity by members of Congress is immensely popular with the American public across the partisan spectrum,” said Craig Holman, Ph.D., Public Citizen.
“The very last thing we need in a democracy is our elected leaders trading on non-public information,” said Porter McConnell, Take on Wall Street Campaign Director at Americans for Financial Reform. “They should be working for us, not using the position of trust we gave them to enrich themselves. The ETHICS Act will go a long way toward fixing this glaring lapse and restoring our faith in democracy.”
“Banning members of Congress from owning or trading stocks is a basic way to help ensure our representatives are making decisions for the good of our people and not their own bottom lines – this is government service after all. This is one of many steps necessary to restore trust with the American people and the legitimacy (and function) of our democracy,” said Joseph Geevarghese, Executive Director of Our Revolution.
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