Stocks Trading Ban For Lawmakers Gains Momentum On Capitol Hill

Having lawmakers prohibit the ownership and trading of individual stocks is a complex issue. It raises questions about how far the prohibition should extend, as well as what other kinds of personal investments or economic liabilities could be considered conflicts of interest.

Why Stock Trading Ban For Lawmakers Gains Momentum on Capitol Hill?

Members of Congress are being challenged to refrain from trading individual stocks in the House, but some Republicans in the Senate are raising early red flags, arguing that some of the leading proposals go too far or would be too difficult to enact.Stocks Trading ban

Republican senators are also concerned that restricting stocks ownership will place the most burden on their colleagues with less money, which could dissuade other qualified candidates from running for office. Among Republican senators, there’s also a view that Democrats are using a stocks-trading ban as a campaign issue after the Senate failed to pass key elements of President Biden’s agenda.

After Nancy Pelosi’s (D-Calif.) husband’s stock trades attracted widespread attention, the idea of banning lawmakers from making trades gained steam in the House. Various lawmakers have been accused of violating the reporting requirements.

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It’s being sponsored by moderate Democratic Rep. Abigail Spanberger (Va.) and conservative GOP Rep. Chip Roy (Texas). It would require all members of Congress, their spouses, and dependent children to put certain investment assets in a qualified blind trust within 90 days of the bill’s enactment.

Following a “60 Minutes” expose of trades lawmakers made during the 2008 financial crisis, Congress in 2012 passed the Stop Trading on Congressional Knowledge Act. The law requires members and their spouses to disclose stock transactions and bars them from trading on nonpublic information “derived” from their official positions.

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But there are a few problems with the existing rules, according to critics. For one thing, enforcement of the law has been spotty at best, and the penalties for failing to disclose trades are puny, starting at $200.


The issue is winning buy-in from all corners of Congress and is already being touted by members and candidates facing tough elections in the November midterms, and a number of proposals are in the works of the great House and Senate, so it’s unclear what the final product will look like. But a common theme is that the bills focus on individual stocks and many leave out those that are part of a mutual fund.

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