In Our View: Time to crack down on lawmakers’ stock trades

During the early days of the COVID-19 pandemic, congressional members who were publicly providing assurances that government was prepared for the virus were privately working to financially benefit from it.

In one example, ProPublica reported last year, Sen. Richard Burr, R-N.C., sold between $628,000 and $1.72 million worth of stocks in 33 separate transactions on Feb. 13, 2020. This was while, as then-chairman of the Senate Intelligence Committee, Burr was receiving daily briefings about the virus that was emerging from China.

Burr was not alone. And a steady stream of revelations about the financial dealings of members of Congress has demonstrated the need for reform. Elected officials should not be allowed to financially benefit from information that is not available to the public.

Both parties are pursuing legislation to prevent the trading of individual stocks by congressional members. Equally important, polls indicate strong public interest in such legislation — from supporters of both parties.

The issue is endemic, with elected officials from both parties frequently flouting the law. In 2012, Congress passed and President Barack Obama signed the Stop Trading on Congressional Knowledge Act — or STOCK. Among the provisions is a requirement for timely, detailed reports on financial transactions from members of Congress.

But a law is only as good as its enforcement. Business Insider this week identified 56 members of Congress who did not make timely reports in 2021 alone. When such failure occurs, the news outlet reports, the typical fine is $200, and it often is waived by House or Senate ethics officials. During the law’s 10 years, no member of Congress has been prosecuted for insider trading, which is difficult to prove; elected officials have taken advantage.

For example, Rep. Susie Lee, D-Nev., failed to disclose 200 stock trades worth as much as $3.3 million from early 2020 to mid-2021. For another example, Sen. Rand Paul, R-Ky., was 16 months late in reporting that his wife bought stock in a biopharmaceutical company that manufactures an antiviral COVID-19 treatment. (Rep. Kim Schrier, a Democrat from the 8th District, is the only Washington representative on the Business Insider list. Her husband purchased up to $1 million of Apple Inc. stock.)

At best, such subterfuge erodes the public’s wavering confidence in Congress. At worst, it can lead to legislation designed for personal gain rather than public benefit. At least two representatives invested in Johnson & Johnson, one of three companies to have a COVID-19 vaccine approved for widespread use. Even if there is nothing nefarious about the transactions, Congress should avoid the appearance of impropriety.

As Craig Holman, a lobbyist for watchdog group Public Citizen, told The Atlantic: “Sometimes we have to embarrass Congress into doing the right thing, and it works once the public gets involved.”

Notably, House Speaker Nancy Pelosi, D-Calif., is now on board with a ban on congressional stock trading, after initially opposing such a move. Fortune magazine reported that her husband netted $5.3 million from a well-timed transaction in July 2021.

Details about potential bills are being developed, with questions about trades made by spouses and the burgeoning crypto market being difficult to answer. But Congress should lean on the side of caution by forcing members to place holdings in blind trusts and limiting transactions to broad-based mutual funds.

A seat in Congress, after all, is not a throne of gold.