These “Trades” May Finally Be Banned In Congress!

(USNewsMag.com) – Reformers in Congress are outraged by their colleagues who exploit insider knowledge to make money on the stock market, and they are working across the aisle to have a measure heard in committee that would prohibit members of the House and Senate from trading while in office.

Rep. Abigail Spanberger (D-VA) has joined Rep. Chip Roy (R-TX) in pushing for legislation to prevent Congress members from stock trading while being in office. After discussing the issue of legislators involved in insider trading, they both agreed that “this ought to not be legal.”

Using nonpublic knowledge obtained in Congress to trade stocks is a violation of insider trading rules, as stated in the 2012 STOCK Act. Yet, no member of Congress has been convicted of a crime based on legislative knowledge in the almost ten years since passage of the STOCK Act.

Members of Congress often ignore the Act’s requirement that they report any trading activity in which they have a financial interest. There is lax enforcement of the rule, and offenders usually only face a $200 fine.

Spanberger gave many examples of politicians who used insider knowledge to make money in the stock market.

According to a January 2023 report, upwards of two dozen lawmakers were successful in the 2022 stock market in spite of the abysmal economy. In 2020, Senator Kelly Loeffler (R-GA) and Senator Dianne Feinstein (D-CA) were among those who sold their stocks before the pandemic devastated the economy and then bought stock shares in businesses that flourished during the lockdown.

Spanberger claims that lawmakers also invested in Clorox, Zoom, and several pharmaceutical firms that profited greatly during the tough economy.

The Trust in Congress Act, which she and Roy are co-sponsoring, would require all members of Congress, including their families, to place all of their assets in a blind trust.

Since the two originally presented the measure in 2020, it has languished in committee. They have now acquired a Republican backer in Senator Josh Hawley (R-MO), and hopes are high that they will be successful.