House Democrats unveiled draft legislation Tuesday that would build upon Congress’s 2012 STOCK Act as lawmakers seek to curb the ability of public officials to trade on insider information.
Named the Combating Financial Conflicts of Interest in Government Act, the bill would ban senior officials from stock trading and require them to divest from their investments or else donate them to charity or put them in a qualified blind trust. The legislation would apply to lawmakers, the president, vice president, federal appointees to the executive and judicial branches, senior federal bankers, as well as their spouses and dependent children.
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One provision that will likely require more debate is an exception for small business equity that does not carry a conflict of interest. Other exceptions include mutual funds, exchange-traded funds, treasury bills, government bonds, and thrift savings plans.
If enacted, top government officials would need to comply with the ban within 180 days. Disclosures would have to be filed electronically, which addresses the issue of illegible handwritten disclosure forms. The fine for not complying would be increased from $200 to $1,000, and the names of officials who violate the act, as well as the amount of fines they paid, would be publicly available.
The act was drafted by Rep. Zoe Lofgren (D-CA) but is being met with opposition from Democratic Majority Leader Steny Hoyer, who said Tuesday it does not go far enough. Though many Republicans don’t oppose the legislation on principle, they will likely vote against it as well, reportedly frustrated that they’ve been left out of the drafting process. If it comes up for a vote this session, it might not be until after the midterm elections.
“Given the kind of nebulous outlines of the proposals, there’s enough members that are uncomfortable that we wouldn’t have the votes to carry it on the floor,” Rep. Stephanie Murphy (D-FL), a whip who’s not seeking reelection after this term, told Punchbowl News.
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“We need to spend a little more time working on the specifics of the bill, socializing the specifics, and then taking another swing at it when we have a bit more time,” she continued. “This week’s plate is already full legislatively with the need to fund the government.”
Concerns over the ethics of stock trading have plagued Congress this year. Paul Pelosi, husband of Speaker Nancy Pelosi (D-CA), received scrutiny for trading stocks in companies his wife regulates. Sen. Richard Burr (R-NC) resigned from his top post on the Senate Intelligence Committee when the Department of Justice investigated his trades at the beginning of the pandemic. The DOJ decided not to pursue insider trading charges.
