Preventing legislators from profiting on the stock market has been floated for many years, but has never been accomplished despite widespread bipartisan and constituent support. The most recent bill, dubbed “The Insider Trading Prevention Act,” was introduced on November 1 by Rep. Pat Fallon (R-TX). The bill would block members of Congress from trading individual stocks and would also bar their spouses from certain transactions.
Similar bills have been introduced in years past as a means of propping up the STOCK Act, a 1978 law that requires disclosure of stock trading. The act has been widely criticized for failing to ensure that legislators are unable to use information obtained through their work in the public sector to make stock trading decisions. Numerous loopholes and methods of avoiding the STOCK Act are regularly exploited by members of Congress. In 2022, more than 100 legislators ran afoul of the act, though no action was taken against them.
EXCLUSIVE: Rep. Pat Fallon Introduces Legislation Preventing Members, Spouses From Buying Or Selling Individual Stockshttps://t.co/7uJEk2GXfG
— Daily Caller (@DailyCaller) November 1, 2023
Fallon said he has introduced the bill to create a clear set of guidelines about stock trading by legislators to close up the loopholes in existing law. The bill would prevent members from trading securities themselves or through a brokerage but excludes certain stocks. Mutual funds, exchange-traded funds, investments held in Federal, State, or local retirement plans, and U.S. Treasury bonds, bills, and notes. In 2021, Fallon himself ran afoul of the STOCK Act by failing to properly disclose profits from stock trading.
The bill is targeted at members such as former Speaker Nancy Pelosi, who is widely viewed as the primary reason past efforts to restrict insider trading by legislators have failed. Fallon pointed out during the introduction of the bill that Pelosi has seen her assets value increase by $140 million since the Great Recession. Pelosi does not trade stocks herself, but her husband is heavily invested in the stock market and has a long track record of making high-value trades just in the nick of time.
“Undoubtedly, some members seek to use their position to enrich themselves and their families. Still more make honest mistakes trying to navigate the often confusing reporting requirements,” Fallon said to The Daily Caller. “To end all of this, we should simply pass legislation that, once and for all, makes it clear the sitting members of Congress are banned from trading individual stocks altogether.”
The legislation likely has little chance of advancing any time soon, but as Fallon points out, it is a good first step to restore voter’s faith in the government. If nothing else, the legislation will allow members to show their constituents they are serious about “draining the swamp” and are actively working for the good of the American people, not the benefit of the party or themselves.