Bipartisan Senate Group Proposes Ban on Stock Trading in Congress

Members of Congress, the president and the vice president are also expected to divest from certain investments by 2027.

Lawmakers would face a fine equal to their monthly salary or 10 percent of the value of each inappropriate investment if they violate the new rules.

The Homeland Security and Governmental Affairs Committee will vote to advance the bill to the Senate floor on July 24, Peters, the committee chairman, said Wednesday.

“I believe that Americans deserve to have confidence that their federal elected officials are making decisions that are in the best interest of the American public and not in the best interest of their personal finances and the financial decisions that they make,” Peters said.

Lawmakers are prohibited from using information obtained in confidential meetings to make investments. Members must also publicly disclose the stocks they buy and sell. But the penalty for such a violation is $200, which is not much more than the $174,000 salary that most members of Congress receive.

Lawmakers have been so active in the stock market that investment products have been launched that allow ordinary investors to mimic the trades made by members of Congress.

Under the legislation passed Wednesday, members of Congress would still be able to invest in mutual funds or securities investments such as exchange-traded funds, also known as ETFs.

“People increasingly have access to sensitive, nonpublic information when they’re in government. It’s important to mitigate those conflicts of interest, but that doesn’t stop them from investing in the market,” said Virginia Canter, chief ethics counsel at the government watchdog group Citizens for Responsibility and Ethics in Washington.

Previous bipartisan attempts to ban or restrict stock trading in Congress have failed. In 2022, then-House Speaker Nancy Pelosi (D-Calif.) refused to bring a bill to the floor of the House, saying the measure lacked the votes to pass. But she also opposed the measure, and her husband, Paul Pelosi, is a very successful investor.

“We are a free market economy,” Nancy Pelosi said in 2022. “They (members of Congress) should be able to participate in that.”

The former House speaker has long maintained that she personally owns no stock and has no knowledge of or involvement in her husband’s investments.

“Let’s call a spade a spade,” Hawley told reporters Wednesday. “Many members don’t want to ban stock trading.”

Lawmakers who have faced scrutiny over their stock market dealings in recent years have not faced many consequences.

Rep. Pat Fallon (R-Tex.), who failed to timely disclose 122 transactions valued at between $9 million and $21 million in 2021, paid a $600 late-filing fee and corrected the record, though he refused to cooperate with a review by the Office of Congressional Ethics.

The Senate Ethics Committee has not disciplined a senator in more than 15 years, even after a stock scandal rocked the chamber. Then-Senators Richard Burr (R-C.), Dianne Feinstein (D-Calif.), James M. Inhofe (R-Okla.) and Kelly Loeffler (R-Ga.) were investigated in early 2020 after selling large stocks before the coronavirus-induced market crash. Neither the Senate Ethics Committee nor the Justice Department, whose investigators have launched probes into the stock sales, have filed charges.

“The Justice Department’s clear exoneration confirms what Senator Loeffler has said all along: She did nothing wrong,” a spokesperson for Loeffler said after the investigation concluded, adding that “she and her husband acted entirely appropriately and complied with both the letter and spirit of the law.”

Sponsors of the bill said Wednesday they hope Senate Majority Leader Charles E. Schumer (D-N.Y.) will bring the measure to a vote in the full chamber in the coming months. Leaders in the Republican-controlled House of Representatives have also signaled potential interest in a stock trading ban.

But the bill could face tougher hurdles in the Senate, where it would need 60 votes to overcome a potential filibuster. Hawley said he was confident other Republicans would support the measure.

“A number of my Republican colleagues ran in 2018, 2020 and 2022 on banning stock trading. It was part of their campaigns. They said they would do it, they committed to doing it,” Hawley said. “I hope and I expect that there are a number of Republicans — I think it would be pretty hard to explain otherwise … who would support that.”