There has been increased concern recently about alleged insider trading by members of Congress and their families, as well as talk of tightening up the rules governing how elected officials participate in the stock markets, all of which House Speaker Nancy Pelosi (D-CA) has been dismissive.
But House Minority Leader Kevin McCarthy (R-CA), who stands poised to be the next speaker if Republicans regain control of the House in November, recently revealed that he was considering imposing changes to the rules if given the chance, Business Insider reported.
This follows extensive investigative reporting by Insider showing that dozens of members of Congress and nearly 200 of their senior staffers have in some way violated the 2012 Stop Trading on Congressional Knowledge (STOCK) Act, which prohibited members from trading on inside information and imposed a 45-day transaction reporting requirement.
It was Punchbowl News that first reported on McCarthy’s consideration of imposing additional limits or even an outright ban on the ability of Congressmembers to trade in individual stocks and equities if he becomes the next House speaker.
While nothing has yet been formally decided, there are a few different ideas being considered, such as only allowing lawmakers to invest in mutual funds managed by professionals.
Other ideas include requiring members to place all investments in a blind trust managed by a third party, while still another would ban members from investing in companies or broader industries that are governed by their particular committees.
Blind trusts, third parties
Insider noted that McCarthy has room to talk here because he has already voluntarily refrained from trading in any individual stocks since coming to Congress, and while he is not entirely alone in doing so, he is quite likely in a small minority in that regard.
Interestingly, McCarthy’s stance on congressional trading appears to be at least somewhat aligned with progressive Sen. Jon Ossoff (D-GA), who is seeking Republican co-sponsorship in the Senate for a bill that would specifically ban members of Congress, as well as their spouses and children, from trading individual stocks and equities while in office, according to the New York Post.
Ossoff, like McCarthy, does not engage in any individual stock trading, as he voluntarily placed all of his assets and investments in a blind trust prior to joining the Senate in January 2021.
Ready for action
Thus far, Sen. Ossoff has yet to find the bipartisan support he is seeking in the Senate before formally introducing a bill, but it is expected that some in the GOP will step up and do so as public pressure increases. There is, however, already bipartisan support for such action in the House.
In fact, a bill known as H.R.336, the Trust in Congress Act, introduced by Rep. Abigal Spanberger (D-VA) and co-sponsored by a handful of Republicans, would require members and their close family to do as Ossoff did and place all their financial holdings in a blind trust until 180 days after leaving office.
All of this conflicts greatly with Speaker Pelosi, whose husband Paul has been quite a prolific and successful investor over the years, and who in a mid-December press conference dismissed talk of banning members of Congress and their families from trading individual stocks because, in her words, “We are a free market economy. They should be able to participate in that.”