For the first time since early 2020, when CLC revealed that members of Congress made over 1,500 controversial stock trades at the onset of the COVID-19 pandemic, a bill prohibiting congressional stock trading is moving forward.
During a July 24 business meeting, the U.S. Senate Committee on Homeland Security and Governmental Relations voted 8-4 to advance the bipartisan Ending Trading and Holdings in Congressional Stocks (ETHICS) Act, sending it to the Senate floor for consideration.
The ETHICS Act is the product of nearly two years of conversations between Senate offices and stakeholders. It received a committee vote after Sens. Peters (D-MI), Merkley (D-OR), Hawley (R-MO), and Ossoff (D-GA) reached a bipartisan agreement to revise and strengthen the bill.
This important legislation prohibits members of Congress, as well as the president and vice president, from buying and selling stocks and other securities, commodities, or futures.
In so doing, it reflects the public’s clear preference that members of Congress should be banned from stock trading while in office, with 86% of people across party lines supporting such a prohibition.
Before the committee vote, CLC sent a letter to lawmakers that explains how the ETHICS Act will help restore voters’ confidence that their elected officials, who craft and implement laws directly affecting their lives, are acting in the public’s best interest and not for their own financial gain.
Under the current law, the Stop Trading on Congressional Knowledge (STOCK) Act of 2008, members of Congress are required to report stock trades worth over $1,000 within 45 days of making the trade.
However, these reporting requirements are routinely ignored with little consequence. Even if a member is sanctioned under the law, the $200 penalty it imposes is hardly impactful.
By contrast, under the ETHICS Act, if a covered elected official fails to divest or conducts a trade while in office, they face a penalty equal to their monthly salary, or 10% of the value of the covered asset, whichever is greater. This penalty more adequately reflects the seriousness of an elected official breaking the public’s trust.
Importantly, the ETHICS Act also prohibits spouses and dependent children from trading stock. By doing so, the ETHICS Act decreases the significant risk that spouses and dependents can be used as conduits for insider trading or create conflicts of interest through their own stock trading.
Now that the ETHICS Act is out of Senate committee, lawmakers must swiftly pass the legislation. This essential reform will help restore voters’ trust that Congress, the president, and the vice president are focused on the public’s needs, rather their own personal wealth.