Legislation introduced earlier this month by Democratic Senators John Osoff of Georgia and Mark Kelly of Arizona required members of Congress and their spouses and dependent children to place their investments in a blind trust.
“Members of Congress should not play in the stock market while we set federal policy and have extraordinary access to classified information,” Ussoff said.
Republicans are also active on the issue, with Senator Josh Hawley of Missouri introducing similar legislation to Ossoff and Kelly and House Minority Leader Kevin McCarthy saying he could push for a stock-trading ban if Republicans take control of the November 2022 midterm elections.
“I think any member of Congress is trading stocks with crazy activity,” Republican Senator Marco Rubio of Florida told AFP. “Suppose the price of this stock goes up, people will suspect that you have inside information.”
Potential conflict of interest Under the Stock Act, which took effect in 2012, lawmakers are required to publicly report transactions within 45 days.
But critics say the law is not adequately policed and insufficient to address the obvious problem of conflicts of interest.
“The current problem is that the law is not being enforced and not enough,” said Cedric Payne, general counsel for Campaign Legal Center, an NGO.
“You see over and over again that members of Congress don’t even disclose their stock trades on time. But even when members do disclose their stock trades, we still see a conflict of interest with theirs.”
Financial news site Business Insider found that 54 members of Congress and 182 congressmen violated the stock law, with members of both parties failing to report the transactions.
In early 2020, four US senators came under scrutiny for selling shares just before the market plunged, as much of the US economy shut down due to Covid-19.
The Justice Department eventually closed the investigation without bringing charges to lawmakers.
The issue has also come to light in recent months at the Federal Reserve, where two regional chairs and a Fed Vice Chair have either resigned or left earlier than planned, after revealing financial trades as they helped set monetary policy.
An investigation by the Wall Street Journal in September showed that 130 federal judges violated US law and judicial ethics by overseeing court cases involving companies in which they or a family member owned stock.
The Federal Reserve announced stricter investment rules after the information was disclosed, while the Supreme Court promised to strengthen judicial ethics.
– Opposition to the ban – But expectations of a ban on Capitol Hill appear ambiguous due to the opposition of powerful figures, including House Speaker Nancy Pelosi, who has announced her personal opposition to the stock trading ban.
“We are a free market economy; they should be able to participate in that,” Pelosi said at a recent news conference calling for better implementation of existing rules.
But Pelosi, who has indicated that the Department of Justice can sue members of Congress for insider trading under existing law, has said in recent days that she is open to a ban if the Democratic Caucus supports it.
While Pelosi herself avoided stock trading, her husband was an active investor.
In 2021, Pelosis invested about $19 million in technology companies such as Microsoft, Alphabet and Nvidia, according to the Capital Trades website.
While the outlook for the ban appears uncertain, Washington insiders believe the odds may suddenly improve if the issue emerges as a major focus of the November campaign.
A poll published earlier this month by the Conservative Conference on State Business showed that 76 percent of voters say members should not trade stocks while serving in Washington.