Congressional stock trading is back in the limelight following a New York Times analysis that found 97 members of Congress engaged in stock market transactions that could potentially be seen as conflicts of interest.
The findings, which highlighted trades by 49 Republicans and 47 Democrats, are the latest report highlighting an ongoing issue in politics of elected leaders being accused of potential insider trading.
Rep. Abigail Spanberger (D-VA), an outspoken critic of members of Congress stock trading, said it only weakens the confidence that Americans have in their elected representatives.
“What we want to make sure is that back in January 2020, when we were having classified briefings about a potential pandemic, that no one is able to leave, call their stock broker, and say ‘I want you to put money in on Pfizer and Clorox and dump these other stocks,’” Spanberger said on Yahoo Finance Live (video above). “Whether it was ill-intended or not, those examples are real.”
Spanberger added that the “perception even that those actions were following that briefing, made this choice — that continues to degrade the trust the American people have. We have examples of members of Congress who came to Congress with substantial wealth that they had chosen to have in individual stocks who have already chosen to abide by the legislation that Congressman Roy and I lead along with 65 other members of Congress.”
‘We’re removing even the perception’
That proposed legislation — the TRUST in Congress Act — would “require members of Congress and their spouses and dependent children to place certain assets into blind trusts, and for other purposes.” The bill was first introduced by Spanberger and Rep. Chip Roy (R-TX) and now has a total of 65 additional co-sponsors from both political parties.
Spanberger stated that she and Roy came up with the idea for the legislation after the Justice Department announced in March 2020 that it would be investigating certain senators to determine whether they traded ahead of the stock market crash triggered by the coronavirus pandemic.
Former Sen. Richard Burr (R-NC), who was chairman of the Senate Intelligence Committee at the time and received confidential briefings about the emerging threat of the coronavirus pandemic, and his wife sold numerous stock shares following those briefings, according to an investigation by ProPublica and The Center for Responsive Politics.
Though Burr denied the allegations and the Department of Justice ended its inquiry into his trading actions in January 2021, the damage was done.
“That’s what motivated Chip Roy, Republican from Texas, and I to write this legislation to say ‘Let’s just remove any opportunity for either inappropriate behavior or the perception of conflicted trading,’” Spanberger said “So we said: It’s very simple. You can’t own individual stocks and you can’t buy or sell. Either you put your money into a diversified fund or you roll your money into a blind trust, hands off what’s there. You leave that to a professional to handle so that every time we are taking a vote, the American people are sure there’s no conflict and we’re removing even the perception.”
A similar bill to the one proposed by Spanberger and Roy — sponsored by Sens. Jon Ossoff (D-GA) and Mark Kelly (D-AZ) — was introduced to the Senate earlier this year. It would prohibit members of Congress and their immediate family members from conducting any stock transactions while serving in office and confiscate the lawmaker’s entire salary if they break the rules.
As it stands, the STOCK Act, which was passed in 2012, was intended to provide transparency in stock trades by lawmakers, who were required to report these trades within 45 days of the transactions. Yet, separate from the New York Times analysis, an ongoing investigation by Insider has indicated that 72 members of Congress have violated that law.
“There’s report after report of legislators who are buying or selling various different stocks that surely seem related to the issues of the day, oftentimes issues of the day that we’re receiving briefings on,” Spanberger said. “The holdup is that it impacts members of Congress, and I think there’s perhaps a hesitance toward change.”
Though House Speaker Nancy Pelosi (D-CA) is not a name on that list, she is among those who had previously expressed reservations about passing an updated law, with some attributing her stance to her husband’s job as a venture capitalist participating in the stock market. In February 2022, Pelosi finally shifted her stance and stated that a vote could happen sometime this year.
A bill ‘the American people want to see overwhelmingly’
Spanberger stressed that the intention of her and Roy’s bill is not to affect the financial security of those elected to serve in Congress but rather to prevent them from getting elected with the sole purpose of profiting from the role.
“We absolutely don’t want to impede anybody from being able to save for their retirement,” Spanberger said. “We absolutely want to make sure that the choice to run for Congress should be one of commitment to service to the country. It should not be one that gets a lawmaker a new opportunity to make money on the stock market.”
Through her proposed bill, members of Congress would be permitted to invest in mutual funds and ETFs instead of individual stocks.
“What’s not permissible is that we go to a briefing where we have members of the intelligence community saying Russia will invade Ukraine and then members leave that classified briefing … and call their broker and say ‘I want to buy more stock in these defense contractors because we know we’re going to be sending U.S.-made weapons and weapons systems to Ukraine.” (According to Insider, at least 20 lawmakers or their spouses hold stock in weapons manufacturers Raytheon Technologies and Lockheed Martin, two companies providing Western allies with weapons sent to help Ukraine in its war against Russia.)
Data shows that Americans support the idea of barring elected officials and their spouses from stock trading. A Morning Consult/Politico Poll found that 63% of all voters support a ban (69% of Democrats, 58% of Republicans) while 57% of all voters support a ban on lawmakers’ families as well (59% of Democrats, 54% of Republicans).
“It’s one that the American people want to see overwhelmingly,” Spanberger said, “and it’s one that bipartisan legislators across the political spectrum recognize a need to make this change to ensure that every time we’re making a decision or every time we enter a meeting with the CEO of a potential company, that we’re there because it matters to our constituents and our country, and not because there might be some benefit to our stock portfolio.”