The Shadow
Congressional Stock Restrictions
I believe that public service is meant to be driven by duty, civic commitment and love for the communities one serves.
And it is my experience that the vast majority of elected officials, whether they be Democrat, Republican, Libertarian or Independent, serve to make their communities better. We often disagree on how to do that, but the motives are genuinely sincere.
However, an unfortunate reality is that not all public officials are driven by this duty to serve. As Benjamin Franklin, for whom Franklin County is named, once noted in the 1787 Federal Convention, the affairs of men are influenced by the “love of power and the love of money.”
The “selfish pursuits” that Franklin warned us about continue to persist in modern times.
Such is the case with Congressional stock trading.
Congress is privy to sensitive, secret and/or early information that most members of the public cannot easily access.
This information may concern national security matters, domestic economic issues or legislative developments.
As a congressman, I believe access to this information is meant to help inform policymaking, legislative and governing decisions.
But some lawmakers from both parties try to capitalize off of this access to information for their personal profit.
Shortly after entering Congress, I sold all my stock that could be traded on a stock exchange, like NYSE (New York Stock Exchange) or NASDAQ.
Now mind you, I did not own a lot. And that sale resulted in me receiving about $6,000.
But when a member of Congress even has the appearance of impropriety in the stock trades, it erodes the public’s trust in Congress.
Former Speaker Nancy Pelosi is one elected official who has drawn intense scrutiny.
According to the Washington Examiner, since becoming speaker in 2007, Pelosi’s wealth grew from roughly $30 million to $278 million today.
Pelosi’s net worth was reported by the Washington Examiner to be influenced by her husband, who made several stock trading transactions in recent years that drew public suspicion.
It is up to you to decide whether you think this is improper or savvy business.
Congress has previously tried to address these types of issues. In 2012, Congress passed the Stop Trading on Congressional Knowledge (STOCK) Act.
This bill made available online congressional disclosures of member stock transactions. Accordingly, the public was able to access such information and identify potential conflicts of interest.
Additionally, representatives could not engage in trading on nonpublic information.
Despite the bill being a step in the right direction, the STOCK Act was not sufficient enough to deter some members of Congress from using their knowledge to gain an advantage with their stock portfolio.
One of the STOCK Act’s shortcomings was its lack of attention to the spouses and dependents of lawmakers.
While all lawmakers are placed under greater scrutiny through public congressional disclosures, their spouses and children could instead make stock decisions on behalf of the lawmakers while avoiding congressional disclosures altogether.
Given these outstanding issues, the Committee on House Administration, on which I serve, recently reported favorably a Republican bill to rein in this improper activity.
I am an original cosponsor of the Stop Insider Trading Act.
This Republican bill bans not only members, but also their spouses and dependent children, from purchasing securities issued by a publicly traded company while the member is in office.
The proposed legislation also mandates that lawmakers who plan to sell a stock they owned prior to entering Congress must provide advanced public notice at least 7 days and no more than 14 days prior to such sale.
Should representatives fail to follow the law, they will be penalized $2,000 or 10% of the value of the covered investment, whichever is greater.
This penalty is far greater than that set forth in the STOCK Act, which imposed $200 penalty fees per violation.
These provisions make the Stop Insider Trading Act a stronger bill than the STOCK Act.
Accordingly, I proudly voted with the Committee on House Administration to report this bill favorably. I am hopeful that the full Congress considers this commonsense legislation soon.
Your trust means a lot to me, which is why I sold my publicly traded stock. But, many members of Congress get elected already possessing significant stock portfolios, some worth millions of dollars.
This bill lets them keep the stock they own, but not buy more, and restricts the sale of their stock.
The Stop Insider Trading Act should not be necessary.
But it should stop those few members of Congress who do not share a true commitment to public service.
If you have questions, concerns, or comments, feel free to contact my office. You can call my Abingdon office at 276-525-1405 or my Christiansburg office at 540-381-5671. To reach my office via email, please visit my website at https://morgangriffith.house.gov/.
