A new bill to ban members of the U.S. Congress from trading stocks while in public office is expected to be unveiled in August, according to a new report.
What Happened: Democratic members of the House of Representatives are planning to unveil a bill to ban stock trading by members of Congress, Punchbowl News reported Thursday.
A plan for the ban could be unveiled in August with a vote in Congress as early as September.
Under the terms of the bill, members of Congress would be banned from stock trading and would be forced to sell their current positions or put their assets into a blind trust. Members of Congress would still be able to hold mutual funds under the new bill.
Along with members of Congress, the ban would also affect spouses and senior staff members according to the report.
“We’re almost ready to move forward on this,” Rep. Zoe Lofgren, chair of the House Administration Committee, told Punchbowl.
Speaker of the House Nancy Pelosi previously opposed the ban but said earlier this year she would support a ban.
Related Link: 10 Best Stock Traders In Congress In 2021
Why It’s Important: The call to ban members of Congress from stock transactions has gained steam with Pelosi among the most public figures called out for questionable transactions.
Pelosi’s husband Paul Pelosi is a venture capitalist who frequently takes large positions in technology and large cap stocks. Pelosi has stated her husband gets no inside information from her ahead of key Congressional items and votes, but many are skeptical.
The Pelosis recently filed a transaction for exercising options in NVIDIA Corporation NVDA ahead of the CHIPS Act, which could benefit the company, and Nancy Pelosi spoke positively in support of the bill after the transaction was made. The Pelosis announced earlier this week they sold 25,000 shares of NVIDIA at a loss in a potential move to silence critics.
The Pelosis also took a large stake in Microsoft Corporation MSFT before a potential Pentagon contract was awarded and bought shares of Tesla Inc TSLA ahead of clean energy bills.
The ban on stock trading by members of Congress and their spouses could put a huge spotlight on the Pelosis, with some pointing to whether or not spouses need to be included in the bill, given some have professions in the stock market.
“What happens if a member of Congress’s spouse is a stock broker? Does he or she have to quit their job?” Punchbowl asked in its report.
In 2012, the Stop Trading on Congressional Knowledge Act (STOCK Act) was passed to fight against insider trading by members of Congress.
While the STOCK Act requires proper disclosures of stock transactions, it has been criticized for members of Congress not disclosing in a proper timely fashion and receiving minimal fines.
A report from Unusual Whales showed many members of Congress beat the return of the SPDR S&P 500 ETF SPY. Some of the transactions were questionable given the committees served on and the timing of buys and sales.
The founder of Congresstrading.com told Benzinga last year that changes needed to be made to members of Congress being allowed to trade.
“It’s incumbent upon Congress to regulate themselves, which is why we’ve seen inaction on this since the passage of the STOCK Act in 2012,” the founder, who asked to remain anonymous due to the sensitive nature of his site, told Benzinga.
He called several trades by the Pelosis as “crystal clear conflicts” based on having knowledge of potential government contracts such as Microsoft.
“It gives almost all of their trades the appearance of impropriety.”
The founder of the Congress tracking site said several items could be done to make changes to how transactions are handled:
- Lawmakers locking in their holdings before being sworn into office for the duration of their service.
- Liquidate positions and only trade broad-market-based ETFs while in office.
- Eliminate the buying and selling of financial assets for members of Congress while in office.
- Real-time disclosures of any transactions.
- Photo: lev radin via Shutterstock
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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