The Stop Trading on Congressional Knowledge Act, or the “STOCK Act,” passed in April of 2012 with Bipartisan support, made it illegal for members of Congress to engage in insider trading. In April 2013, key provisions of the law were weakened, reducing the safeguards against insider trading.
10 years later, there is a new bipartisan push to limit stock trading among members of Congress, this time aiming to outlaw the practice completely.
Those in favor say that it is important to take the step to remove the threat of conflicts of interest that could arise from congress members using classified briefings or committee meetings to gain information that could be used to make money in the market.
House Speaker Nancy Pelosi, D-Calif., doesn’t personally trade stocks, but her husband does and the transactions are regularly reported.
When asked about the effort to ban congress members from banning stocks entirely, Nancy Pelosi backed the current system stating “We are a free market economy. They should be able to participate in that.”
Lawmakers filed reports that exposed trades by members of both parties in 2020 that resulted in profits after briefings on the seriousness of the pandemic. After reviewing several cases the justice department did not pursue any charges, however, a lack of faith in the system still remains in the minds of many.
The push toward laws further restricting congressional stock trading has support from both sides of the aisle. With progressives such as Alexandria Ocasio-Cortez and Republicans such as Chip Roy both backing the proposed bill.
27 members of congress, including 25 Democrats and 2 Republicans, signed a letter drafted by Rep. Jared Golden (D-ME) which was addressed to House Speaker Nancy Pelosi (D-CA) and House Minority Leader Kevin McCarthy (R-CA).
“There is no reason that members of Congress need to be allowed to trade stocks when we should be focused on doing our jobs and serving our constituents,” the letter, first reported by Insider, reads.
With this widespread push for the new law, Pelosi pivoted on the issue saying that “if members want to do that, I’m OK with that.”
The Wiley Online Library hosts an academic paper that outlines how congress members routinely make more trading than average citizens.
Between this and the profits made off their own power over how the beginning of the Covid-19 pandemic was handled, distrust in the effectiveness of the STOCK act is growing.
One of the primary issues with the STOCK act is the room for interpretation it offers with what is and is not “nonpublic knowledge” as well as how involved members of congress are in their trades. A complete ban would restore trust in the institution as well as stamp out all possibilities for insider trading.
Lastly, the letter states, “Perhaps this means some of our colleagues will miss out on lucrative investment opportunities,” the letter reads. “We don’t care.”