Sens. Jeff Merkley, D-Ore., and Josh Hawley, R-Mo., are among the lawmakers who have introduced a bipartisan bill that would ban lawmakers from trading stocks.
Valerie Plesch/Bloomberg, Getty Images; Drew Angerer/Getty Images
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Valerie Plesch/Bloomberg, Getty Images; Drew Angerer/Getty Images
A bipartisan group of senators has unveiled a new proposal that would ban members of Congress, their spouses and dependent children from trading in individual stocks.
Sens. Jeff Merkley (D-Ore.), Gary Peters (D-Mich.), Jon Ossoff (D-Georgia) and Josh Hawley (R-Mo.) are outlining a plan called ” A new version of the Ethics Act would end the trading and holding of congressional stocks. Peters, chairman of the Senate Homeland Security and Governmental Affairs Committee, is expected to take up the bill in his committee later this month.
Merkley previewed the new proposal in an exclusive interview with NPR, saying: “If you want to serve in Congress, don’t come here to serve your office, come here to serve the people.”
He believes the issue cuts across party lines, and “there is absolute public consensus that stock trading is wrong,” Merkley said, pointing to a University of Maryland poll that showed 85 percent of the public supports members of Congress banning trading.
The current law requires lawmakers to disclose information when trading individual stocks, but critics say it is unevenly enforced and insufficient. The Stocks (Stop Trading in Congressional Knowledge) Act of 2012 requires members of Congress and their spouses to disclose any transactions exceeding $1,000 within 45 days.
Insider trading laws apply to lawmakers, but in the wake of the 2009 financial crisis, there are even greater demands for transparency on their investments. Before major banks began to fail, several lawmakers made huge profits after trading financial services stocks. The transactions raise questions about whether they profited from information known to congressional committees.
“The fact that MPs are doing better than the average portfolio suggests that people are hearing some privileged information – it may not be inside information, it may be early information, it may be insights gained through committee work or working in a department, Or wait, but that’s a problem,” Merkley said.
The new bill, if passed, would instruct lawmakers to immediately stop buying any new individual stocks and would be required to divest any personal assets when the next congressional session begins in 2027. Previous reform proposals directed lawmakers to transfer assets to blind trusts, but this measure designates mutual funds. The proposal does not include congressional staff.
“We’ve struggled for a long time with whether to include blind trusts, they’re complex, but in this case it’s really simplistic. People don’t hold stocks, this is the cleanest, purest form,” Merkley said.
Several bipartisan efforts have been proposed in the House and Senate in recent years, but none have made enough progress to merit committee consideration. Former House Speaker Nancy Pelosi, who does not trade stocks but whose husband is an active trader, initially opposed the new reforms but opened the door to passing the legislation around the 2022 midterm elections. The Senate has pushed through several amendments to change the law without success, but no group has introduced legislation to address concerns since the STOCK Act passed.
Experts say enforcement of the current law is weak, with lawmakers facing $200 fines for failing to report transactions within required deadlines, which supporters say is the only way to track whether investments are related to official business. But members of both parties acknowledged they failed to submit their reports on time, with some submitting their reports weeks or even more than a year late.
The Senate proposal would expand the penalties. Under the scheme, failure to divest would result in a fine of 10% of the value of a councilor’s monthly salary or the value of each offending asset – whichever is higher.
“The fines in this bill are substantial,” Merkley said. He emphasized that penalties would be imposed on a monthly basis and noted that “violators can have a huge impact very quickly.”
Under the new Senate proposal, all lawmakers and new elected members would have until March 31, 2027, to make changes to their existing portfolios. The proposal also includes a provision requiring divestiture certificates covering the president and vice president.
If a legislator leaves public office, there will be a 90-day “cooling off” period during which he will still be prohibited from investing in individual stocks.
It would also increase the fine for failure to report to $500 and require all disclosures to be in a searchable public repository.
The revelations lawmakers are now filing have prompted financial services companies to develop products that mimic the lawmakers’ investments. These funds have consistently outperformed the market — and the dynamics of the nonprofits pushing for reform demonstrate the public’s distrust of their elected officials.
Merkley acknowledged that the proposal was unlikely to receive a stand-alone vote, but said he aimed to attach it to another must-pass bill this year.
He acknowledged the difficulty of addressing the issue when pushing a law that would affect lawmakers’ financial portfolios, saying: “Members of Congress are going to get very agitated, and they feel it when you say your family is going to be protected as well. worry.
