Congress debated banning lawmakers from trading individual stocks, but Democratic leaders never brought a bill up for a vote.
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Seventy-eight members of the 117th session of Congress violated a federal conflicts-of-interest and financial disclosure law, according to a review of congressional financial disclosures by Insider and other news outlets.
The law — the Stop Trading on Congressional Knowledge Act of 2012, also known as the STOCK Act — passed in 2012 under President Barack Obama following insider trading scandals that rocked Congress. The STOCK Act notably requires members of Congress to report trades they made, or made by their spouses or dependent children, within 45 days or risk a financial slap on the wrist — the standard penalty for such a violation is $200.
But a decade on, Republican and Democratic lawmakers alike routinely violate the STOCK Act: 40 Republicans and 37 Democrats in the current Congress violated the law, per Insider's tally.
Some members of Congress violated the law more egregiously than others. GOP Rep. Pat Fallon of Texas, for example, violated the STOCK Act multiple times and waited months to disclose up to $17 million in trades. Democratic Rep. Tom Suozzi of New York repeatedly failed to file reports on time across nearly 300 personal financial transactions.
The House Committee on Ethics ultimately absolved Suozzi and Fallon from being penalized for violating the STOCK Act — the committee found that there was not "clear evidence" either congressman committed "knowing or willful" violations of the act. This, despite a referral from the independent Office of Congressional Ethics, which conducted its own investigation and unanimously concluded earlier this year that there was "substantial reason to believe" Fallon and Suozzi violated the STOCK Act.
In December 2021, following a question from Insider's Bryan Metzger, House Speaker Nancy Pelosi rejected the idea of preventing members of Congress from trading individual stocks.
"We are a free-market economy. They should be able to participate in that," Pelosi said.
Pelosi's answer quickly led to criticism from Democratic and Republican members of Congress. It also led some members to draft their own legislation banning the practice, such as Democratic Sens. Mark Kelly and Jon Ossoff, as well as Republican Sen. Josh Hawley.
"Year after year, politicians somehow manage to outperform the market, buying and selling millions in stocks of companies they're supposed to be regulating," Hawley said. "Wall Street and Big Tech work hand-in-hand with elected officials to enrich each other at the expense of the country. Here's something we can do: ban all members of Congress from trading stocks and force those who do to pay their proceeds back to the American people. It's time to stop turning a blind eye to Washington profiteering."
After months of waiting, Democratic leadership wrote and sponsored its own bill banning members of Congress, their families, and dependent children from trading individual stocks. Democratic leaders, however, punted a vote on the bill until after the 2022 midterm elections.
Now, with little time left in the legislative session, the bill is poised to die.
With Republicans taking control of the House, there is a possibility for a stock trading ban to receive a resurgence in support. House Minority Leader Kevin McCarthy said prior to the midterm elections that he was open to such a ban. Since it became clear that Republicans will control the House next legislative term, however, McCarthy — who is likely to become the next House speaker — has been silent on the topic.
In late 2021, Insider endeavored to digitize each member of Congress' financial records, leading its reporters to pore over the data to find numerous unreported conflicts of interest from several members of Congress as part of its "Conflicted Congress" investigation.
This includes lawmakers who shape US defense policy while simultaneously holding shares of defense companies and legislators who actively traded stocks in companies that make COVID-19 vaccines at the height of the pandemic.
As part of the investigation, Insider also found that at least 182 high-ranking congressional staffers also violated the STOCK Act with late and overdue disclosures.
