Politics

New legislation aims to prohibit congressional insider stock trading

By CM Chaney · November 2, 2023

Republican Congressman Pat Fallon introduced legislation to prohibit members of Congress and their spouses from trading individual stocks in order to prevent insider trading by lawmakers and restore public trust. Ramy Majouji / Wikimedia

Republican Rep. Pat Fallon introduced a bill on Wednesday to prohibit members of Congress and their spouses from buying or selling individual stocks while in office.

Fallon’s Insider Trading Prevention Act aims to end lawmakers potentially profiting from non-public knowledge gained through their positions. It would ban trading of individual stocks, allow exceptions for spouses receiving company stock as employee compensation, require public certification of compliance from members, and impose fines for violations.

The legislation comes amid growing bipartisan support for limiting lawmaker stock trading. Social media users have tracked trades by members of Congress to try to beat the market, as 35 members in 2021 outperformed a major index fund.

“In 2022, nearly 100 Members of Congress violated the STOCK Act, intended to prevent insider trading,” Fallon said. He noted former Speaker Nancy Pelosi’s wealth has ballooned to $140 million since the recession.

Fallon argued the status quo erodes public trust in government. “Undoubtedly some members seek to enrich themselves and their families,” he said. “Still more make honest mistakes navigating confusing reporting rules. Media often ignores bad actors while excoriating innocent oversights for partisan reasons.”

The congressman believes banning trading is the only sure solution.

“To end all of this, we should simply pass legislation that, once and for all, makes it clear sitting members of Congress are banned from trading individual stocks altogether,” he stated.

Polling shows broad public support for restricting lawmaker stock trades. A January survey found just 5% approve of the practice, while 75% want it banned.

“The Insider Trading Prevention Act is a critical first step to restore the public’s faith in Congress. This is clear, easy to understand and will eliminate good faith errors and, more importantly, egregious self-aggrandizement and insider trading,” Fallon said.