Congressional Stock Trading and the STOCK Act: A Report by the Campaign Legal Center

Be it federal laws, public policies, or regulations that directly affect the daily lives of citizens, elected officials are entrusted with the responsibility of making decisions that prioritize the public welfare. In a democratic society, it is imperative that voters have faith in their lawmakers, knowing that these decisions are made with the public interest at heart and not for personal financial gain. Unfortunately, the issue of congressional stock trading has long been a cause for concern, casting a shadow of doubt on the integrity of those in power.

To address these concerns, Congress, with the backing of the Campaign Legal Center, passed the Stop Trading on Congressional Knowledge (STOCK Act) in 2012. The legislation aimed to curtail allegations of insider trading among members of Congress by requiring them to disclose their stock trades within 30 days and imposing penalties on those found guilty of engaging in such practices. While the STOCK Act was a step in the right direction, it has failed to live up to its intended purpose of eradicating corrupt practices and restoring public trust in elected officials.

One of the primary issues with congressional stock trading is the conflicts of interest that arise when lawmakers have financial stakes in areas they have the power to influence through policy decisions. Moreover, the early access to privileged information puts them at an advantage in the stock market, allowing them to make personal gains before the information is made public. This was glaringly evident during the COVID-19 pandemic, where some members of Congress profited from stock trades made following a closed-door briefing on the state of the economy.

Despite the enactment of the STOCK Act, the lack of stringent penalties has rendered it ineffective in preventing insider trading. The nominal $200 penalty for violations hardly serves as a deterrent when the potential gains from stock market dealings could amount to millions. Enforcement issues have further undermined the credibility of the legislation, with no member of Congress ever facing prosecution for insider trading under the STOCK Act.

Recent data reveals that the ownership of stocks among members of Congress remains prevalent, with only a small fraction abstaining from such investments. Both Republicans and Democrats are engaged in stock trading, highlighting the bipartisan nature of the issue. Campaign Legal Center has filed numerous complaints based on undisclosed or delayed stock trading activities, emphasizing the need for accountability and transparency in financial dealings by lawmakers.

Given the widespread public support for prohibiting members of Congress from trading stocks, there is a growing demand for reforms to mitigate conflicts of interest and rebuild public confidence in the federal government. A bipartisan solution, such as the proposed ETHICS Act, presents an opportunity to address the shortcomings of the STOCK Act and instill greater accountability among elected officials.

In conclusion, the persistence of conflicts of interest in congressional stock trading underscores the urgent need for comprehensive reform. Transparency provided by the STOCK Act has shed light on the financial entanglements of lawmakers, emphasizing the inherent conflicts of interest that pose a threat to the integrity of governance. By adopting meaningful legislative changes and closing existing loopholes, lawmakers can restore public trust and uphold the principles of ethical governance in the United States.