(Bloomberg) -- Recent investing scandals involving members of Congress have prompted two Democrat senators to push a Draconian legislative proposal: a total ban on U.S. lawmakers trading any stocks at all.
Senators Jeff Merkley of Oregon and Sherrod Brown of Ohio said the prohibition would prevent lawmakers from abusing their positions for personal gain. In a Thursday statement, they said it would address situations in which politicians have profited from buying and selling stocks in certain industries while at the same time working on legislation that impacts those industries.
As justification for the proposal, Merkley and Brown referenced two instances of alleged misconduct, both of which involved Republicans.
First they pointed to Representative Chris Collins, the New York lawmaker who won re-election in November after being indicted on insider-trading charges four months earlier. They also cited former Health and Human Services Secretary Tom Price, who traded health care stocks while he was in Congress, including shares he purchased at the recommendation of Collins.
“It’s way past time to end conflicted trading, in which legislators and top staff trade in stocks while making decisions affecting their value,” Merkley said in the statement. “It undermines both the integrity of governance and the perception of integrity. Let’s end this corruption now.”
Collins has pleaded not guilty. Price, who resigned as HHS chief in September 2017 amid complaints that he used private jets at taxpayers’ expense, has denied wrongdoing over his stock trades. Federal authorities haven’t accused Price of misconduct.
The Democrats’ bill would seem to face extremely long odds of winning approval in a politically divided Congress. Plus, many lawmakers might argue that Congress already toughened rules to prevent insider trading as recently as 2012 through a bill called the Stock Act.
That law made it illegal for members of Congress and federal officials to trade on pending information about legislation decisions. It also requires lawmakers to publicly disclose stock transactions up to 45 days after making them -- in addition to annually revealing holdings as part off their assets and liabilities.
The bill Merkley and Brown plan to propose requires new members of Congress to sell their stock holdings within six months of being elected, while current lawmakers would have to divest shares within six months of the legislation’s enactment. Lawmakers would also be prohibited from sitting on corporate boards. The legislation requires senior congressional staff members to sell their stock, as well.
If politicians don’t want to sell, they could instead agree to engage in no trading as long as they’re in office. Alternatively, they could transfer their stock to a blind trust. Lawmakers would still be allowed to invest in mutual funds and exchange traded funds that are made up of many companies.
--With assistance from David Goodman.
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