A bipartisan group of senators announced a new bill yesterday to stop members of Congress, including the president, vice president, their spouses and dependent children, from trading stocks.
The bill, known as the Ending Trading and Holdings in Congressional Stocks (ETHICS) Act, is spearheaded by five senators and aims to prevent members from profiting from insider knowledge while in office.
According to the proposal:
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Lawmakers, their spouses and dependent children must divest from individual stocks starting in 2027 and invest in mutual funds instead. The bill imposes stricter penalties for non-compliance, including fines equaling a lawmaker’s monthly salary or 10% of the asset value—whichever is greater.
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Lawmakers would not be allowed to trade for 90 days after the bill becomes law.
The Homeland Security and Governmental Affairs Committee plans to vote on advancing the bill on July 24.
Furthermore, all investment disclosures will be available in a searchable public database, with a $500 penalty for failing to report trades.
The proposal builds on the existing Stop Trading on Congressional Knowledge (STOCK) Act of 2012, which allows lawmakers and their spouses to trade but requires them to disclose activity of more than $1,000 within 45 days. In case of failure to report in time, a penalty of $200 is levied. Due to the low amount of the fine, it has not had the intended effect.
The initiative follows previous efforts to regulate lawmakers’ stock trading, which gained traction after reports of profitable trades by senators during early COVID-19 briefings. Despite the FBI investigating three senators for insider trading, no charges were filed.