Why Lawmakers Don’t Want to Ban Their Own Stock Trading

GOP Rep. Rob Bresnahan campaigned on ending the practice, but has become a top trader after entering office

By Katy Stech Ferek of The WSJ. Excerpts:

"Many lawmakers decry stock trading on principle, only to back off later when faced with the practical impacts—ranging from transaction costs and taxes to annoyance over being told how to conduct their finances. While some are plowing ahead on ideas for new bans, passage remains uncertain after a history of failed efforts.

Proponents of a crackdown see trading as an obvious opportunity for corruption. Opponents note that insider trading is already illegal and say that new rules would discourage successful business people from running for Congress.

Sen. Rick Scott (R., Fla.), one of Congress’s wealthiest members, with investments in private equity and hedge funds, in a recent hearing raised questions about how lawmakers would sell illiquid assets under a stock-trading ban. Scott, who hasn’t reported any stock trading this year, said supporters of a ban were insinuating that a lawmaker’s wealth is bad."

"Only a third of House lawmakers and slightly less than half of senators traded individual stocks or held them as assets while in office last year"

"It is more common for lawmakers to hold investments in mutual funds, which wouldn’t be affected by most of the current trading-ban proposals."

"New bipartisan legislation . . . was rolled out Wednesday. The proposal would give lawmakers 180 days to sell off stocks or face fines." 

"Lawmakers passed the Stock Act in 2012, mandating more disclosures and explicitly outlawing trading on nonpublic information, but further efforts sputtered. In 2021, then-House Speaker Nancy Pelosi (D., Calif.)—whose husband’s trades have become a target of conservative critics and good-government groups—defended lawmakers’ ability to trade. “We are a free-market economy,” she said. “They should be able to participate in that.”"

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Did U.S. government officials make money buying and selling stocks based on their inside information about Covid policy? (2022) 

60 Minutes: Insider trading is legal for members of Congress-but it is nothing new, it started in 1790  (2011)