Congress will ban lawmakers' stock trading 'with or without' Pelosi's help, lobbyist vows
Just a decade ago, lawmakers in Congress had few restrictions when it came to trading stocks while they were in office — they could even technically use insider information.
Then-President Barack Obama signed the Stop Trading on Congressional Knowledge Act in 2012 to finally add some limits by banning lawmakers and their aides from trading based on information obtained in private briefings. It also required public disclosure of trades within 45 days.
But a parade of recent headlines on lawmakers who have made profitable trades after closed-door meetings shows just how porous the system is.
Those headlines may actually spur Congress to pass a new law with more teeth than the STOCK Act.
“I think we have a very good, real chance of getting [new] legislation passed,” Craig Holman told Yahoo Finance Live this week. He is Public Citizen’s Capitol Hill lobbyist on ethics, lobbying, and campaign finance rules who was closely involved in passage of the original STOCK Act.
“We're ready to go a step further — the STOCK Act was good but it isn't enough,” Holman says of the prospects for reform in Congress.
'A stock-picking legend'
Scrutiny over lawmakers' trading ramped up in 2020. That year, high-profile lawmakers Sens. Kelly Loeffler (R-GA) and Richard Burr (R-NC) sat in a closed door briefing on the emerging threat of COVID-19 and then allegedly used that information to sell stocks before the wider public knew of the virus' dangers and the market tumbled, as The New York Times reported.
Loeffler lost her seat to a Democrat, Rev. Raphael Warnock. Burr, one of three no votes on the original STOCK Act, remains in the Senate after the Justice Department ended its inquiry into his trades without charges.
More recently, an investigation by Insider found 54 members of Congress have violated the transparency provisions in the STOCK Act by failing to properly report their trades.
The transgressions have gotten so brazen that popular sites now track lawmaker trades for tips. Social stock market app Iris says House Speaker Nancy Pelosi "has quickly become a stock picking legend,” though it's actually her husband who is the one trading stocks.
Before Congress, three flavors of reform
The most aggressive idea to combat the problem, reportedly set to be unveiled this week, comes from Sen. Jon Ossoff (D-GA), who wants to bar members of Congress and their immediate families from any trading while in office. A related idea comes from Representative Abigail Spanberger who wants to require all members of Congress — as well as their spouses and dependent children — to put certain investment assets into a qualified blind trust while they're in office.