No More Stock Trading for Congress Members: The Return of the PELOSI Act
Legislation Proposal to Prohibit Members of Congress from Personal Stock Trading or Ownership Introduced
In the freewheeling world of the US Congress, lawmakers have been legally allowed to own and trade stocks, a practice that's been under scrutiny for quite some time now. With the Stop Trading on Congressional Knowledge (STOCK Act) in place, Congress members are required to disclose their stock trades within 30 days and are penalized for insider trading.
However, this doesn't stop them from making profitable trades where their official duties may conflict, a practice that seems to have been prevalent in 2024, according to Unusual Whales, a startup. They found that the stock portfolios of numerous Congress members from both major parties significantly outperformed the S&P 500 that year.
Enter the Preventing Elected Leaders from Owning Securities and Investments (PELOSI) Act. Revived by U.S. Senator Josh Hawley, this bill aims to put a stop to this questionable practice. The bill was earlier proposed in 2023 but failed to gain traction under the Biden administration. However, President Trump's vocal support for such a bill has given this proposal a fresh lease of life.
Hawley states, "Members of Congress should be out there fighting for the people they were elected to serve, not lining their pockets with ill-gotten gains through insider trading." The PELOSI Act, if passed, will prohibit members of Congress and their spouses from trading or holding individual stocks during their tenure.
While the Act will bar them from trading individual stocks, investments in diversified mutual funds, exchange-traded funds, or U.S. Treasury bonds will still be permitted. Current lawmakers will have 180 days to divest and comply with the new legislation, while newly elected members will be required to do so within 180 days of taking office.
Refusing to comply with the PELOSI Act will result in forfeiting any stock profits to the U.S. Department of the Treasury and facing monetary penalties imposed by the House and Senate ethics committees.
It's worth noting that the STOCK Act, which was passed in 2012 with the support of Congress (in collaboration with the Campaign Legal Center), required members of Congress to disclose their stock trades more frequently and imposed penalties on members who engaged in insider trading. However, it did not outright ban stock trading, which the PELOSI Act is looking to address.
As of now, the PELOSI Act is in its early stages, with no mention yet of committee assignments or votes. Whether this Bill will make it through remains to be seen, but one thing is certain: it's high time our lawmakers stopped treating the stock market as their personal ATMs.
References:1. NPR2. Politico3. CNN4. Business Insider5. Bloomberg
- The Preventing Elected Leaders from Owning Securities and Investments (PELOSI) Act aims to address the controversy of Congress members trading stocks.
- If passed, the PELOSI Act will prohibit members of Congress and their spouses from trading or holding individual stocks during their tenure.
- Hawley believes that members of Congress should focus on serving the people, not engaging in questionable stock trading practices.
- The PELOSI Act will still allow investments in diversified mutual funds, exchange-traded funds, or U.S. Treasury bonds.
- Lawmakers will have 180 days to divest and comply with the new legislation, while newly elected members will have to do so within 180 days of taking office.
- Refusing to comply with the PELOSI Act will result in forfeiting any stock profits to the U.S. Department of the Treasury and facing penalties from the House and Senate ethics committees.
- The STOCK Act, passed in 2012, required more frequent disclosure and penalized insider trading, but did not outright ban stock trading—a concern that the PELOSI Act is attempting to address.
