For 12 years, Sen. Jeff Merkley (D-OR) has pushed for a ban on congressional stock trading, calling the practice “corrupt,” “unacceptable” and “wrong.”
The first time he and Sen. Sherrod Brown (D-OH) presented an amendment in 2012 that would prohibit members of Congress from playing the stock market, they only got 26 votes in support.
Now, Merkley is confident an amended version of the Ending Trading and Holdings in Congressional Stocks (ETHICS) Act has enough bipartisan support that it will come out of a markup meeting with the Senate Committee on Homeland Security and Governmental Affairs on Wednesday with the votes necessary to present the amendment for a vote.
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“As the discussion has proceeded, members have been coming around to the recognition that this damages the integrity of our institution. It damages the perception of the integrity of our institution. That it's a conflict of interest that’s unacceptable and has to be addressed,” Merkley told Raw Story in a phone interview. “It's why it's taken a decade plus to get to this point, but I’m now optimistic that coming out of committee, we can get it up as an amendment on the floor. I think we'll get the 60 votes to pass.”
The amended version of the ETHICS Act, supported by Merkley and Sens. Jon Ossoff (D-GA), Gary Peters (D-MI) and Josh Hawley (R-MO), calls for an immediate ban on members of Congress buying stocks and would prohibit them from selling stocks 90 days after enactment.
Members’ spouses and dependent children would be prohibited from trading stocks starting in March 2027, and that year, members of Congress, the president and vice president would also be required to divest from covered investments.
Covered assets include securities, commodities, futures, options and trusts.
Merkely said if the bill passed both chambers he is confident that President Joe Biden would sign it into law.
“I cannot imagine a world in which he wouldn't sign legislation that bans stock trading,” Merkley said.
During his presidential term, Biden has been notably quiet on the issue of whether to ban lawmakers from trading stocks. The White House did not immediately respond to Raw Story’s request for comment.
A spokesperson for former President Donald Trump, who is the Republican presidential nominee, also did not immediately respond to Raw Story’s questions on the topic.
The ETHICS Act dramatically increases the penalties for members of Congress who fail to abide by divestment requirements, fining them the greater amount of either their monthly salary or 10 percent of the value of each covered asset in violation.
“The ETHICS Act, the heart of it was to say, well, people shouldn't be trading stocks at all, and if you are, you're going to get hugely hammered,” Merkley said.
The fines would get repeatedly applied for lack of compliance. Failing to file proper financial disclosures in a publicly searchable database would result in $500 fines, an increase from the $200 violation fine in the Stop Trading on Congressional Knowledge (STOCK) Act, which requires members of Congress to publicly report within 45 days most purchases, sales and exchanges of stocks, bonds, commodity futures, securities and cryptocurrencies.
“You get hit month after month after month with huge fines for holding products that you're not allowed to hold under the act,” Merkley said. “It is a much, much bigger deal than a couple hundred dollar fine, and it's assessed repeatedly, month after month.”
Raw Story has identified several dozen members of the 118th Congress who have violated the STOCK Act since January 2023. Numerous other members of Congress have made stock trades that conflict with their official responsibilities, such as lawmakers who trade defense contractor stock while sitting on a congressional committee with defense oversight responsibilities.
“I so appreciate the fact that you are monitoring this and publicizing this,” Merkley said of Raw Story's reporting. “The penalties were very weak in the STOCK Act.”
The modified version of the STOCK Act has support from numerous government watchdog groups, including Public Citizen, Project on Government Oversight, Citizens for Responsibility and Ethics in Washington and the Campaign Legal Center, to name a few.
“They've been entrusted with awesome power by the voters,” Donald Sherman, executive vice president and chief counsel for Citizens for Responsibility and Ethics in Washington, told Raw Story of members of Congress. “The least we can ask of them is that they avoid financial conflicts of interest that could emanate from their financial entanglements. That is really basic. As much as they have the choice to participate in the market, they also have the choice not to be in elective office.”
Numerous bills have been introduced in recent years to effectively ban stock trading for members of Congress or increase the penalties for violations. None have yet gotten a floor vote, and during the past three years, former House Speaker Nancy Pelosi has been one of the biggest obstacles to previous stock ban bills advancing.
“The timing has always been great, but now there appears to be bipartisan consensus in the Senate, so let's get things moving as people are always interested in legislation around ethics before an election,” Sherman said.
Peters, Ossoff and Hawley did not respond to Raw Story’s interview request.
But while vocalizing his support from Trump last week at the Republican National Convention, Rep. Matt Gaetz (R-FL) expressed his belief in the importance of a congressional stock trading ban.
"For the same reason you don’t let the referee bet on the game, ban members of Congress from trading individual stocks," Gaetz said.
