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Congress takes another stab at banning members from trading stocks

US Capitol buildingCaution tape blows in the wind on the east front plaza of the U.S. Capitol Building on September 27, 2023 in Washington, DC. House Speaker Kevin McCarthy (R-CA) continues to have difficulty finding a legislative path that would prevent the federal government from partially shutting down at midnight on September 30 and would also not jeopardize his speakership.

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  • A bipartisan group of Senators introduced a new bill that would ban Congress from trading stocks.
  • The ETHICS act would impose hefty fines against members of Congress that violate the law.
  • “There is no reason why members of Congress ought to be profiting off of the information that only they get,” Senator Jeff Hawley said.

Congress is once again attempting to ban its members from trading individual stocks.

A bipartisan group of Senators unveiled a new bill on Wednesday that, if passed, would ban sitting members of Congress, their spouses and dependent children, and the sitting President and Vice President from trading stocks.

Members of Congress have faced scrutiny for their individual stock trades since the 2009 financial crisis, but that scrutiny has increased considerably over the past few years, especially as some members have made timely, profitable trades.

There’s even a growing movement for investors to follow the trades of sitting members of Congress via ETFs that track their trades.

The concerns over members of Congress and their spouses trading stocks are mainly based on the material information that they might be privy to that the rest of the public is not.

Republican Senator Josh Hawley and Democratic Senators Jon Ossoff, Jeff Merkley, and Gary Peters introduced the bill.

“There is no reason why members of Congress ought to be profiting off of the information that only they get,” Hawley said at a press conference on Wednesday.

The legislation, dubbed the ETHICS act, or Ending Trading and Holdings in Congressional Stocks, is a milestone in that it will be the first stock trading bills to get formal consideration by the Senate’s Homeland Security and Governmental Affairs Committee later this month.

House of Representative members Alexandria Ocasio-Cortez and Matt Gaetz worked together in 2023 to introduce a stock trading ban, but the bill didn’t get far.

The ETHICS legislation, if passed, would immediately ban members of Congress from trading stocks, and it would come with an imposed timeline to divest their stocks when the next session of Congress starts in 2027.

“If you want to serve in Congress don’t come here to serve your portfolio, come here to serve the people,” Senator Merkley told NPR.

The proposed law would also impose hefty fines on Congressional members who violated the trading ban.

“The fines are huge in this bill,” Merkley said. “A person who is in violation would run up huge impacts very, very quickly.”

The current fine for members of Congress who fail to disclose their stock trades in a timely manner is $200, based on the STOCK Act that was passed in 2012.

The proposed ETHICS Act would levy a fine that is the greater amount of either their monthly salary or 10% of the value for each asset that is in violation of the law.

But the passage of this new stock trading ban faces an uphill battle from Congress itself.

“Members of Congress get very twitchy and when you say your family will be covered too, they have concerns,” Merkley said.

Merkley said that while the ETHICS Act was unlikely to receive a standalone vote for passage, he is aiming to attach it to another high-priority bill this year in the form of an amendment.

Read the original article on Business Insider

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