Every year, members of Congress hold hearings and meetings with business leaders, propose industry regulations, and vote on hundreds of pieces of legislation that affect stock prices across many industries. These activities give them access to non-public information about industry, technology, and even impending actions by specific companies. While it may seem obvious that our elected officials should not be able to profit from this insider information, current laws intended to curb this behavior, such as the STOCK Act passed in 2012, are inadequate or unenforceable. In fact, recent reporting showed that 57 members of Congress violated the STOCK Act in 2021 alone. Some of the most egregious behavior came from former Senators Richard Burr and Kelley Loeffler, who made incredibly well-timed stock trades while still in office at the beginning of the pandemic. In another example, former Senator David Perdue, made over 2,500 stock trades in one term. Many Members of Congress have enriched themselves with information gained from their access to industry data, leading one to wonder if their legislative decision making is driven more by the desire to make successful stock trades than to serve their constituents.
With over 75% of the public supporting a ban of congressional stock trading, and given the clear ethical issues, it is time for Congress to pass legislation that would end this practice. While several bills have been proposed, one of the strongest is S. 3494, the Ban Congressional Stock Trading Act. This bill would ban stock trading from elected officials, their spouses, and their dependent children, while holding office. It would also require divestment of several types of assets or require that they be moved into blind trusts. It contains strong disclosure and enforcement provisions, with fines equaling a month’s salary for every month while not in compliance.
Insider trading is illegal but many elected officials have found loopholes in our current laws allowing them to abuse the system. We must close these loopholes and demand a ban to congressional stock trading.