Members of Congress are privy to a lot of nonpublic information. And because they regularly introduce legislation or participate in closed-door committee investigations or inquiries, many members become aware of information or a new regulation being considered or a law in the making that can have a significant impact upon various business sectors and many publicly traded companies. They learn these facts as part of their work, and they get that information long before members of the public.
The law prohibits insider trading, or the buying or selling of stock based upon nonpublic information. Members of Congress are subject to those laws just like everyone else. But it is often very difficult to prove awareness of or use of nonpublic information in connection with specific stock transactions.
Nonetheless, it is a clear conflict of interest for members of Congress to make personal investment decisions when they possess confidential information not known to the public. Yet, we regularly hear about senators or representatives, or members of their immediate families, who have traded in stocks directly impacted by some aspect of congressional review or action.
Those activities could be legal, or maybe not. But they unquestionably look bad. And it is reported that nearly 20% of the 535 members of Congress — including members of leadership on both sides of the aisle — are buying and selling stocks where there may be a conflict of interest.
Public trust in the federal government is at an all-time low. According to a recent Pew Research Center report, less than 30% of Democrats and less than 10% of Republicans trust government always or most of the time. But notwithstanding the deep political and cultural divides in our country, close to 80% of all voters — Democrats, Republicans and Independents — reportedly support banning members of Congress from trading stocks. It is difficult to think of another current legislative issue on which such an overwhelming majority of American voters agree.
A number of bills have been introduced in the House and the Senate to address the congressional stock trading issue. Their common theme is the imposition of significant restrictions on the ability of congressional lawmakers and their immediate family members to profit from trading stocks and other securities, with serious penalties for violations. Although House Speaker Nancy Pelosi indicated a short while ago that a bill would be brought to the House floor for a vote, that plan was scrapped and consideration is now delayed until November, or even later.
Delay on the enactment of a congressional stock trading ban is a mistake. The longer congressional stock trading goes unchecked, the more the image of congressional ethics is diminished. We encourage prompt consideration and adoption of a ban on congressional stock trading. It is the right thing to do.