Democratic and Republican members of Congress renewed efforts to prohibit fellow lawmakers from trading individual stocks.
Several prominent lawmakers have been accused of leveraging their intimate knowledge about forthcoming regulations to purchase stocks at opportune times or mitigate losses by selling shares. The legislation introduced on Tuesday by Rep. Pramila Jayapal (D-WA), Rep. Matt Rosendale (R-MT), and Rep. Ken Buck (R-CO) would ban the trading of individual stocks, bonds, commodities, and futures by lawmakers and their spouses, as well as establish a $50,000 civic penalty for each violation enforced by the Department of Justice and the United States Office of Special Counsel.
“It’s past time for Washington to do the right thing and ban members of Congress from using their elected position to enrich themselves,” Buck said in a press release. “Members of Congress receive information that the public does not, it is inappropriate for elected officials to then turn around and invest or buy stocks using that insider information. The American people must have trust that Congress uses this information only to conduct official business, not benefit a stock portfolio.”
Newly elected members of Congress would have a transition period in which they could divest their shares and could defer taxation on gains from investments they are forced to sell.
As many as 97 lawmakers or their immediate family members purchased or sold assets related to their legislative committee work between 2019 and 2021, according to an analysis published last year by The New York Times. Paul Pelosi, an investor and the husband of former House Speaker Nancy Pelosi (D-CA), as well as Elaine Chao, a prominent Republican who served as Transportation secretary and the wife of current Senate Minority Leader Mitch McConnell (R-KY), traded individual stocks while their spouses were in leadership positions.
“Only two in ten Americans trust that our government is working in their best interest,” Jayapal added in the press release. “Members of Congress are elected to serve the people, not our own financial interests. As long as members and their spouses are allowed to trade individual stocks, the door to corruption remains open. This legislation is a long overdue, necessary step to raise the ethical standards of Congress and restore the people’s trust in our work.”
The Pelosis most recently disclosed a sale of 30,000 shares in Alphabet, the parent company of Google, roughly one month before the Justice Department launched an antitrust lawsuit against the technology firm, news of which caused the stock price to decline. They also appeared to have cut losses by selling 25,000 shares in software company Nvidia last year before the United States placed new restrictions on computer chip sales to China and Russia.
Pelosi no longer serves as leader of the House Democrats but retains her seat in Congress.
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Sen. Josh Hawley (R-MO) introduced the Preventing Elected Leaders from Owning Securities and Investments Act, also known as the PELOSI Act, earlier this year to address the individual stock trading phenomenon. While the bill introduced by Jayapal, Rosendale, and Buck would permit lawmakers to continue holding diversified mutual funds and exchange-traded funds, the proposal submitted by Hawley would not allow them to hold such assets.