Taking STOCK of Insider Trading in Congress

“Appreciate today’s briefing from the President’s top health officials on the novel coronavirus outbreak,” former Senator Kelly Loeffler tweeted on January 24, 2020. There is no doubt as to why she appreciated it. Within days of this private briefing and being warned of the havoc the coronavirus was predicted to wreak on the economy, and shortly before markets tanked, she sold off millions in stock. She also bought between $100 thousand and $250 thousand in stock in a remote work software company. Loeffler is not an exception among Congress members—her actions in this situation are often the norm.

Amidst all of the uncertainty in the early days of the pandemic, Congress members sat in closed-door briefings on the emerging threat of the virus before the public knew of its severity. They were in a unique position to act decisively, yet the impulse of many was not to prepare to combat the virus. Instead, both Democrats and Republicans profited from the private information and rushed to buy and sell stocks.

The issue exists on both sides of the political aisle. Representative Tom Malinowski, a Democrat from New Jersey, failed to disclose dozens of stock trades made during 2020 and early 2021, and only did so after Business Insider questioned him. Representative Michael Guest, a Republican from Mississippi, was more than eight months late in disclosing stock trades of two oil companies held by a family trust that benefited his wife. Republicans bought $100 million in stocks this year while Democrats bought $75 million.

Congress passed the Stop Trading on Congressional Knowledge (STOCK) Act of 2012, which prohibits Congress members from using private information for personal reasons and requires them to disclose stock trades made by them and their immediate families. However, members who violate the STOCK Act only have to pay a penalty fee of $200.

Despite the transparency this bill provided to the public, the STOCK Act was later amended to modify the online disclosure portion, no longer requiring some government officials to file their stock exchanges online and making their records less easily accessible to the public.

Not much has changed, even with this bill. Time and time again, politicians have violated this act and not been held accountable. At least 54 Congress members failed to comply with the STOCK Act in 2021, and 182 of the highest paid Capitol Hill staffers were late in filing their stock trades. Politicians and their immediate families bought $267 million and sold $364 million in assets in 2021. Additionally, Congress has an inconsistent method for collecting fines from members who violate the act. Though the STOCK Act was passed in 2012, these countless violations have brought fresh momentum to the issue of congressional stock trading.

Insider trading enables Congress members to unfairly profit from their positions, since they receive information that cannot be accessed by the general public. This advantage gives them the power to make stock exchanges personally benefiting them and shape policy in a direction that is advantageous to them and not the constituents they represent. Lawmakers should not use confidential information to profit off of the very same companies that they should be regulating. If Congress members would like to maintain public trust, they must stop trading stocks.

In a country where politics are incredibly polarizing, a stance against congressional insider trading might be one of the few things uniting it. Voters of all parties agree that Congress members should not be enriching themselves by using insider information while serving: 70 percent of Democrats, 78 percent of Republicans, and 80 percent of independents say Congress members should not be allowed to trade stocks. They are right. The practice must be banned.

It is clear that the STOCK Act, intended to defend against insider trading, promote transparency, and prevent conflicts of interest, has been rendered toothless. This sentiment is shared among many Americans, and Congress must respond accordingly. It is time to pass legislation officially banning congressional insider trading. However, House Speaker Nancy Pelosi is not on board. She recently openly defended congressional stock trading at a press conference in December. “This is a free market,” Pelosi asserted. “We are a free market economy.” This country depends on a free market economy, but this country is also a democracy. Corruption at any level of government actively infringes upon it and must not be defended. Transparency and accountability in our political institutions must be prioritized. Congress must champion these values and ban insider stock trading.

Congress has the opportunity to do so right now. Senator Jon Ossoff, a Democrat from Georgia, and Senator Mark Kelly, a Democrat from Arizona, recently introduced the “Ban Congressional Stock Trading Act,” which would require Congress members, their spouses, and their dependent children to place stock portfolios into blind trusts. Members who violate the rules will be fined their entire congressional salary. All members of Congress must raise their standards for how Congress should act and vote to pass this piece of legislation.

Officials are elected by the public to serve the public. They must prioritize the public’s interests, not personal profits. It is now up to the public to make their voices heard and legislators to listen and put their constituents first.