House Speaker Nancy Pelosi on Thursday reversed her position on efforts from rank-and-file members to restrict or ban members of Congress from trading stock in individual companies while in office.
After previously expressing skepticism over any potential restrictions on members, their spouses, or senior staff and their stock portfolios, Pelosi said she is open to the numerous proposals from members of both parties in both the House and Senate and has told the House Administration Committee to review the incoming proposals to assess which would be easiest.
"If members want to do that, I'm okay with that," she said.
The recent push to address stock trades in Congress came after a five-month investigation from Insider that found 54 members of Congress and at least 182 senior congressional staffers have violated the Stop Trading on Congressional Knowledge (STOCK) Act.
Congress passed the STOCK Act in 2012 that was to prevent members of Congress, their spouses, and senior congressional staffers from using information they get in the course of their job to make a profit a.k.a insider trading.
The bill was introduced over a year before it was passed and was only pushed through after a 60 Minutes segment on members’ stock portfolios sparked a public backlash.
In response to questions about the alleged STOCK Act violations late last year, Pelosi denounced members who were not in compliance with the law. But in response to a second question about whether or not members should be barred from owning stock, she scoffed.
“[T]his is a free market and we are a free-market economy. They should be able to participate in that,” she said.
But the argument from the other side is that these members are making policy and passing laws that impact countless industries. Because of that, their stock portfolios could benefit from the policy they make.
Members in both the House and Senate have introduced bills to address the issue, including proposals from Sens. Jon Ossoff (D-Ga.) and Mark Kelly (D-Ariz.), Reps. Abigail Spanberger (D-Va. 7th District), and Chip Roy (R-Texas 21st District), and Sen. Josh Hawley (R-Mo.) among others.
The proposals have many similarities. Most proposals ban members of Congress from owning or trading stocks in individual companies while in office and require any assets to be placed in a blind trust while serving. The differences come in the finer details. For instance, the Ossoff-Kelly proposal also applies to lawmakers’ spouses and dependent children while others exclude dependents.
They also differ in the enforcement mechanisms. Members who violate the rules in the Ossoff-Kelly bill would be fined the amount of their congressional salary. Hawley’s bill would have members forfeit any investment profits to the Treasury Department and lose the ability to deduct the losses of those investments on their income taxes.
Despite the differences, the proposals reflect bipartisan energy not seen on most legislative issues.
“Members of Congress should not be playing the stock market while we make federal policy and have extraordinary access to confidential information,” Ossoff said.
Lawmakers are required to make public disclosures about their stock moves under the STOCK Act and other congressional ethics rules. But lawmakers trading stocks, even if they comply with the disclosure and ethics rules, still draws suspicion from the press corps and public alike.
We’ve seen this happen as recently as last year. Federal prosecutors investigated stock trades made by Sen. Richard Burr (R-N.C.), Sen. Jim Inhofe (R-Okla.), then-Sen. Kelly Loeffler (R-Ga.), and Sen. Dianne Feinstein (D-Calif.) before the onset of the pandemic and the subsequent plunge in the stock market.
Their moves included selling stock in companies that stood to be hurt during the pandemic (retailers like T.J. Maxx’s parent company TJX Cos.) and buying stock in companies that stood to benefit from a work-from-home reality (Dupont, which makes PPE, and Citrix, the telecommuting company).
No charges were filed against the senators in that probe, but Burr is still the subject of another investigation by the Securities and Exchange Commission.
Ultimately Pelosi, one of the top-10 wealthiest House members, is moving with the energy of her caucus on this issue. Though, without this energy, her comments make it clear she likely believes the status quo with the STOCK Act is sufficient.
"I have great confidence in the integrity of my members. They are remarkable," she said. "So when people talk about well, somebody might do this, and somebody — I trust them. If in fact, we should have severer penalties for delays in reporting on the STOCK Act, then do that."
