While members of Congress have rightly received a lot of publicity and scrutiny for allegedly violating the Stop Trading on Congressional Knowledge (STOCK) Act and trading stock based on nonpublic information they receive in their official capacity, the stock trading problem on Capitol Hill doesn’t end with them.
Senior level congressional staff as well as committee staff in the Senate have their own stock trading rules that get broken on a routine basis.
The Senate has a committee-staff stock ban, which prohibits committee staff from trading stocks in companies that fall under their committee’s jurisdiction. Campaign Legal Center’s latest research found five committee staff who may have violated the ban, and no evidence of any enforcement by the Senate Ethics Committee.
Specifically, Senate Rule 37.7 expressly directs committee staff to “divest [themselves] of any substantial holdings which may be directly affected by the actions of the committee for which [they work].”
The Senate Ethics Committee can issue waivers for this rule, which is not public. Consequently, there is no transparency regarding compliance with this rule, and it appears underenforced.
For example, a single professional staffer on the U.S. Senate Committee on Banking, Housing, and Urban Affairs Committee owns stock in three financial services companies that fall squarely in their committee’s jurisdiction, including Bank of America and Wells Fargo. This raises clear questions of conflicts of interest and diminishes the public’s trust.
In addition to apparent violations of the committee-staff stock ban, staff from the House and Senate have violated the STOCK Act. Earlier this year, Business Insider reported that at least 182 senior staffers did not promptly disclose their stock trades as required by the STOCK Act.
This lack of compliance is troubling, but leads to a larger question: why should senior staffers, particularly staffers who serve on congressional committees and provide lawmakers advice on policy, be able to trade stocks that fall under a policy area they have significant influence over?
These staffers have proximity to power and a unique ability to influence both lawmakers and legislation. Unlike members of Congress — who must directly answer to constituents — these staffers only answer to their elected bosses, who do not have the time to comb through all their committee staff’s financial disclosure reports to identify problematic trades.
Voters have a right to know whether individuals who hold significant sway over our laws and regulations are prioritizing the needs of the public or their own wallets. The Senate Ethics Committee must do more to ensure transparency regarding its own ethics rules.
Trading the stock of companies within your committee’s jurisdiction provides a clear opportunity for corruption or its appearance to take hold.
The lack of transparency and enforcement on these clear conflicts of interest is problematic and should be fixed, but at least there is already a mechanism in place to stop and penalize Senate committee staff from owning conflicted stock.
In the House, committee staff face no restrictions on their stock trading, even when the trades present a clear conflict of interest. House staff are not more immune to the conflicts presented by trading stock than Senate staff and should also be subject to trading restrictions.
Congress must take steps to ensure congressional staff are not privately benefitting from their positions. To start, Congress must increase congressional staff compliance with the STOCK Act. The Senate must begin to actively enforce Rule 37.7 and the House must create its own rule to prohibit committee staff from trading stock in companies affected by their committees.
Most congressional staff are hardworking public servants, whose work should not be tarnished by anyone who takes advantage of lax or nonexistent conflict of interest rules.