More than a year since Rep. Abigail Spanberger (D-Va.) first put forth legislation that would ban members of Congress from trading stock, a flurry of action in the Senate in recent days has injected some momentum into the proposal.
Now, Sen. Jon Ossoff (D-Ga.) has introduced a similar bill with Sen. Mark Kelly (D-Ariz.) to prevent lawmakers from buying and selling stocks while they are in office, giving Spanberger and Roy a Senate champion to move the needle on the legislation.
The bills would require members of Congress, their spouses and dependent children to place their stocks in a blind trust while the member is in office — intended to prevent insider trading, or the appearance of it, given that lawmakers can have access to privileged information.
Sen. Josh Hawley (R-Mo.) introduced a competing proposal last week, excluding dependents and with different enforcement mechanisms — more evidence to Spanberger of the bipartisan energy surrounding the idea, even if some differences may need to be ironed out.
“If placing limitations on how we can buy and sell stock makes it so that someone trusts us a bit more — Congress doesn’t have a great approval rating — I think that is a quote-unquote sacrifice we should make to positively affirm we are deserving of that trust, or to positively affirm we are working for the American people and not our pocketbooks,” Spanberger said.
The issue has gained traction in recent weeks on the heels of an investigation by Business Insider finding that dozens of members of Congress violated the Stock Act’s reporting requirements, which requires members of Congress to disclose stock trades within 45 days of the transaction.
When asked by Business Insider shortly thereafter about whether members and their spouses should be banned from trading stock, House Speaker Nancy Pelosi (D-Calif.) appeared to reject the idea — which Roy and Spanberger said incidentally galvanized interest in the issue.
“The news of the speaker’s comments blew the lid off the issue,” Roy said.
Pelosi — whose spouse has been highly active in the stock market, Business Insider has reported, citing her financial disclosures — noted that “we’re a free-market economy, and [lawmakers] should be able to participate in that.”
“Even if she disagrees or thinks it’s unnecessary, I think there was a dismissiveness of the question that I think caught a lot of attention and certainly has propelled this issue a bit more,” Spanberger said.
In a statement Friday, a spokesman for Pelosi said that the speaker “believes that sunlight is the best disinfectant and has asked Committee on House Administration Chair Zoe Lofgren [of California] to examine the issue of Members’ unacceptable noncompliance with the reporting requirements in the Stock Act, including the possibility of stiffening penalties.”
“To be clear, insider trading is already a serious federal criminal and civil violation and the Speaker strongly supports robust enforcement of the relevant statutes by the Department of Justice and the Securities and Exchange Commission,” said the spokesman, Drew Hammill.
House Minority Leader Kevin McCarthy (R-Calif.) has reportedly expressed interest in limiting or banning members from trading stocks, while Biden’s top economic adviser, Brian Deese, called it a “sensible” proposal in an interview Friday with CNBC.
Spanberger and Roy put together the TRUST in Congress Act in the summer of 2020 after a handful of lawmakers faced scrutiny over their stock sales in the early days of the pandemic — or in the case of Sen. Rand Paul (R-Ky.), his wife’s purchase of stock in the pharmaceutical company Gilead Sciences that developed an antiviral covid-19 treatment, a purchase he reported 16 months late.
Sen. Richard Burr (R-N.C.), then chairman of the Senate Intelligence Committee with access to private coronavirus briefings, sold hundreds of thousands of dollars in stocks in mid-February 2020 before the virus spiked in the United States or the situation was even declared a pandemic. Sens. Dianne Feinstein (D-Calif.) and James M. Inhofe (R-Okla.) and former senators Kelly Loeffler (R-Ga.) and David Perdue (R-Ga.) also fell under scrutiny for stock sales they or their spouses made before the global market took a major hit due to the pandemic.
Spanberger said that, even if no impropriety occurred, avoiding the mere appearance of it is just as important, given people tend to assume the worst about lawmakers’ intentions.
She and Roy, a House Freedom Caucus conservative, said they haven’t agreed on much — but on this, they found common ground. “I was talking to Chip Roy, and we were really pretty disgusted in our discussions about, isn’t this ridiculous that not only is this happening, but it’s so sad that the American people’s response to it is, ‘Of course they’re buying pharmaceutical stocks in the early days of the pandemic.’ ”
The lawmakers’ friendship dates to 2019, around the time the University of Virginia was in the national college basketball championship — both of them attended U-Va., and one day Spanberger spotted Roy’s U-Va. tie. “It brought us together to have something in common that we would talk about, be friendly about,” Roy said. Soon after, they discovered they shared a birthday — and from there came just a few items in politics, including the insider-trading legislation.
Andrew Lautz, director of federal policy at the National Taxpayers Union, which backs the bill, said the bipartisan nature of the anti-corruption legislation has been encouraging. In the House, its co-sponsors range from liberals like Rep. Katie Porter (D-Calif.) to moderate and wealthy businessman Rep. Dean Phillips (D-Minn.) and conservatives like Rep. Scott Perry (R-Pa.)
“For us, this is not a Republican or Democratic issue — members of both parties have traded individual stocks, and there are members of both parties who want to stop it,” Lautz said. “I just really hope that this issue and these proposals don’t become a partisan football.”
Other proposals have gone further than asking lawmakers to put their stocks in a blind trust, like the one from Rep. Angie Craig (D-Minn.) requiring that lawmakers be banned from owning stocks at all. Another bipartisan proposal, from Rep. Raja Krishnamoorthi (D-Ill.) and Sen. Jeff Merkley (D-Ore.), would ban members of Congress and certain congressional staff, though not family, from trading stocks, permitting them to place them in a blind trust as well.
Roy pointed to Phillips as an example of how his and Spanberger’s blind-trust legislation would work. Phillips, who serves on the House Ethics Committee, promised during his campaign that he would put his stocks in a blind trust so that voters could be assured he was not influenced by his financial holdings. It was time-consuming and expensive, Phillips said, and he believed Congress should provide members resources to create the trust if the legislation passes. But ultimately he believed it was worth it.
“I want to restore integrity wherever possible to raise the ethical bar,” Phillips said. “It just became apparent there’s a gap between the public demand for accountability and integrity and our internal regulation.”
While Roy reports owning a stake in a few companies on his financial disclosure, Spanberger reports none, aside for one stock that is part of her husband’s employment compensation.
She said it was a decision she made as she entered Congress — even though it took quite a bit of convincing to get her husband to agree to sell off all their stocks, she said. “He likes to comment from time to time, ‘I’d be so good on the stock market if only my wife would let me,’ ” Spanberger joked.