Share-trading lawmakers face pressure in Washington

Twenty-seven House members－25 Democrats and two Republicans－signed an open letter on Monday calling to swiftly bring forward a bill to ban members of Congress in office from owning or trading stocks.

Craig Holman, a lobbyist at the government watchdog group Public Citizen, said bipartisan momentum behind legislation prohibiting Congress from trading stocks is growing.

"Democrats and Republicans alike have found themselves in politically hot water for even the appearances of congressional insider trading, so many lawmakers are prepared simply to ban such stock trading altogether for Congress," Holman told China Daily.

Currently, Congress members buy or sell stocks under the Stop Trading on Congressional Knowledge Act, or STOCK Act, overwhelmingly passed with bipartisan support by Congress in 2012 and amended in 2013, which outlawed insider trading. The STOCK Act mandated high-ranking officials, including members and employees of Congress, file detailed financial disclosures.

"The STOCK Act finally made it illegal for lawmakers to use that inside information, but still allowed them to actively play in the market.… The pandemic brought home the point that many members appear to be doing insider trading. Following confidential briefings on the likely impact of the pandemic on the economy," Holman said.

He said Republican Senator Richard Burr dumped all his stock in a single day immediately after the briefing. Former Republican senators Kelly Loeffler and David Perdue sold many of their stocks just before a crash in the market when they were in office. Democratic Senator Dianne Feinstein was among lawmakers who earned higher-than-average returns on stock investments.

Serkan Karadas, assistant professor at the University of Illinois Springfield, highlighted the pattern in a paper published a few years ago, according to San Jose Inside.

'Not working'

"One recent investigation found that the STOCK Act had been violated hundreds of times just since 2020. It's clear the current rules are not working," read the letter. The call across the aisle is trying to bring legislation "such as the Ban Conflicted Trading Act or the TRUST in Congress Act to the House floor".

After a five-month investigation, Business Insider and other media identified 54 members of Congress－32 Republicans and 22 Democrats－and 182 congressional staffers in the current Congress who allegedly violated provisions of the STOCK Act by not reporting their stock trading records in a timely fashion. They blamed oversights, clerical errors and inattentive accountants among other reasons.

Penalties for lawmakers who violate the STOCK Act are minor－usually a $200 fine, which is sometimes waived by House or Senate ethics officials.

"Members of Congress and senior congressional staff are privy to confidential briefings and inside information about likely trends in the economy that no one else has," Holman said. "This access to confidential material information opens the window of opportunity for insider trading, and many lawmakers appear to be doing exactly that."

According to a survey released on Jan 20 by conservative advocacy group Convention of States Action, 76 percent of voters believe that lawmakers and their spouses have an "unfair advantage" in the stock market.

Last November, another poll commissioned by the Campaign Legal Center showed that 67 percent of voters support banning lawmakers from owning or trading stocks.