House lawmakers who made millions trading stocks while having access to privileged information are now finally pushing a bipartisan bill to ban the practice they’ve been profiting from for years.
Rep. Chip Roy of Texas led a group of about a dozen lawmakers Wednesday announcing legislation to prohibit Congress members and their families from owning individual stocks. The coalition includes both progressive Rep. Alexandria Ocasio-Cortez and ultra-conservative Rep. Tim Burchett, who admitted: “I don’t agree with some of these people on anything.”
The push comes after multiple reports showed lawmakers consistently beat the market while ordinary Americans saw their retirement accounts collapse. More than two dozen Congress members outperformed the stock market in 2022 despite the worst year for Wall Street since 2008.
Rep. Patrick Fallon, a Texas Republican, led the pack with 51.6% returns in 2022. He bought up to $150,000 worth of Twitter stock in January 2022 and cashed out after Elon Musk announced his acquisition plans, potentially netting $75,000.
Right behind Fallon was Rep. Debbie Wasserman Schultz of Florida, who saw her investments spike 50.8%, and Rep. Susie Lee of Nevada at 21.4%.
“One day Chip Roy and I were talking on the House floor and we were both expressing our disgust,” Rep. Abigail Spanberger, a Virginia Democrat, said about colleagues who profit from their positions. “And we said, you know, this ought to not be legal.”
The current law only requires lawmakers to disclose their trades after making them. The 2012 STOCK Act was supposed to shame politicians into stopping their trading through public disclosure. That didn’t work.
Under the new bill, lawmakers who currently own individual stocks would have 180 days to sell them off. New members would get 90 days after taking office. They could still own diversified mutual funds and ETFs.
“It’s not every day you see this cast of characters up here,” said Rep. Brian Fitzpatrick, a Pennsylvania Republican. “You’re all smirking out there. That’s a good thing. It speaks to the power of this cause.”
Sen. Josh Hawley of Missouri has a Senate version that would extend the ban to future presidents and vice presidents but notably exempts President Donald Trump.
The celebration may be premature. Even if the House passes the bill, it faces long odds in the Senate, where at least 60 votes are needed. Some senators have already expressed opposition.
Sen. Ron Johnson of Wisconsin dismissed the effort as “legislative demagoguery,” arguing existing insider trading laws and disclosure requirements are sufficient.
Rep. Anna Paulina Luna of Florida set an end-of-month deadline for House leadership to bring the bill to the floor, threatening to force a vote if they don’t act.
The lawmakers’ newfound concern about profiting from insider information comes after years of documented cases where politicians made perfectly timed trades ahead of major policy announcements and market-moving decisions.
In 2020, several senators sold stocks after receiving classified briefings about the coming COVID-19 pandemic but before the public knew how severe the crisis would become. Georgia Sen. Kelly Loeffler and others dumped millions in holdings right before markets crashed.
“The truth is that a lot of the information that members of Congress get isn’t technically insider information,” Hawley said. “Yet it’s still really beneficial if you want to try and make a buck on the stock market.”