WASHINGTON — Democratic lawmakers say support is growing for a full ban on members trading or owning individual stocks and stronger penalties for those who engage in insider trading.
A proposal introduced Tuesday by Sen. Jeff Merkley, D-Ore. — with support from 20 Democratic and independent Senate colleagues — would dramatically reshape rules governing members’ ability to profit off investments while in office. It’s the latest in a more than decade-long effort by Merkley and others to curb what they see as unethical trading by lawmakers. A companion bill to the Senate legislation was introduced by Rep. Raja Krishnamoorthi, D-Ill., in the House.
“The American people know that there is corruption on Capitol Hill, that members are writing legislation thinking about their stock portfolio. ... That members are buying stocks with information the public doesn’t have. That’s wrong,” Merkley said Tuesday at a news conference outside the Senate. “We need to end it. We have a growing coalition to make that happen.”
Sens. Sherrod Brown of Ohio, Martin Heinrich of New Mexico and John Fetterman of Pennsylvania, all of whom are co-sponsors, joined Merkley at the news conference, as did Krishnamoorthi.
The proposal would bar members, their spouses and dependent children from owning or trading individual stocks, securities, commodities or futures. Members and their families could either divest, diversify into allowable assets — like mutual funds — or place their assets into qualified blind trusts.
It would also strengthen penalties and enforcement for violators. Fines for members who continue to trade in violation of the act would be equal to or greater than the member’s monthly pay.
Merkley’s latest attempt to curb member stock trading and ownership has more support than previous efforts — a signal, he says, that Congress could be more amenable to act on an issue that’s so far proven intractable. But it still may lack Republican support in the Senate, he said.
“I remember my amendment back in 2012… it lost by a big margin in the Senate,” Brown said at the press conference, referring to an earlier effort that would’ve required members and their staff to divest from individual stocks or put them in a blind trust.
Brown, with Merkley’s support, offered the proposal as an amendment to the STOCK Act, the 2012 federal law that forbids members from trading on nonpublic, material information they receive as part of their jobs. Only 26 senators voted for the amendment.
“And I remember the blowback from fellow senators,” Brown continued. “‘How dare you do that?’”
But opinions within the House and Senate have shifted, according to Brown, Merkley and other proponents. And the public’s distaste for lawmakers profiting off information gained in the halls of Congress has become increasingly clear.
Convention of States Action, a conservative advocacy group, found in a 2022 poll that 76% of voters, including 70% of Democrats and 78% of Republicans, do not believe members of Congress should be able to trade stocks while in office.
Scrutiny of members’ trades has increased since the onset of the COVID-19 pandemic. The nonpartisan Campaign Legal Center found that dozens of House and Senate members made more than a thousand financial transactions between February and early April 2020 after receiving closed-door briefings on the burgeoning public health crisis. The Justice Department investigated the trading activity of several senators, though those cases were all ultimately dropped.
Former Speaker Nancy Pelosi has previously opposed a stock trading ban, but softened her position somewhat in 2022, backing legislation that would have bolstered fines for noncompliance with the STOCK Act. But Democrats, who controlled both the House and Senate for much of the 117th Congress, failed to bring any related measures to the floor for votes.
Lawmakers have now renewed their efforts. A group of eight House members — Krishnamoorthi among them — in February urged Speaker Kevin McCarthy, R-Calif., to bring legislation to the floor that would ban stock trading. And a separate, bipartisan group of lawmakers advocated for bans or restrictions on stock trading and ownership during a March House Administration Committee Members Day hearing.
Some members of the far-right House Freedom Caucus have rallied around the issue. Rep. Chip Roy, R-Texas, partnered with Rep. Abigail Spanberger, D-Va., on a bill introduced in January that would require members of Congress, their spouses and dependent children to place certain assets into blind trusts while in office. And Rep. Michael Cloud, R-Texas, co-sponsored Krishnamoorthi’s House bill.
But, according to Merkley, Senate Republicans have been mostly mum on the issue, with the exception of Josh Hawley, R-Mo., who introduced his own bill in January that would prohibit members and their spouses from holding or trading individual stocks and would require members found in violation to return their profits to taxpayers.
“I welcome Josh Hawley to the conversation,” Merkley said. “He’s the only Republican who has taken a clear public position in this regard and I thank him for it.”
Complicating matters, there are several proposals in play, though Merkley insisted that was a “strength, not a weakness.” Merkley said Sens. Jon Ossoff, D-Ga., and Mark Kelly, D-Ariz., are working on their own legislation and several House bills have been introduced since the beginning of the 118th Congress that would take different tacks to address the issue.
And despite the “growing coalition” touted by Merkley, it’s unclear whether this latest legislation can avoid the fate of past measures, including a 2021 bill introduced by Merkley, with Brown’s support, that never made it to the floor.
Merkley, when asked what had changed in the interim, cited subsequent efforts to find common ground since his last proposal failed.
“Well, what’s different is we went through an entire year of intense conversations with members trying to find a common pathway,” Merkley said. “And we came close, which is why we have this larger number of endorsers.”
