https://www.npr.org/2021/09/22/1039565467/many-believe-its-time-to-do-away-with-lawmakers-making-stock-trades

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Many Believe It's Time To Do Away With Lawmakers Making Stock Trades
A law policing insider trading on Capitol Hill passed nearly 10 years
ago. But a trend has emerged from lawmakers from both parties -- they
are ignoring disclosure rules created to show transparency.

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Politics

Many Believe It's Time To Do Away With Lawmakers Making Stock Trades

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September 22, 20217:19 AM ET
Heard on Morning Edition
Deirdre Walsh, 2018

Deirdre Walsh

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Many Believe It's Time To Do Away With Lawmakers Making Stock Trades

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A law policing insider trading on Capitol Hill passed nearly 10 years
ago. But a trend has emerged from lawmakers from both parties -- they
are ignoring disclosure rules created to show transparency.

RACHEL MARTIN, HOST:

Members of Congress are privy to a lot of classified information. If
they use that information to boost their own personal finances, say
in the stock market, that could land them in prison. The Stock Act,
as the law is known, requires lawmakers to disclose when they trade
individual stocks. There's a bipartisan trend lately, though. Members
of Congress are ignoring that law or reporting trades late, sometimes
several months after they make big investments. Here's NPR
congressional correspondent Deirdre Walsh.

DEIRDRE WALSH, BYLINE: Federal probes of several senators last year
came after they disclosed lucrative stock trades following briefings
on the pandemic. The Justice Department reviewed the transactions
from a bipartisan group of four senators. All insisted they didn't do
anything wrong, and the Justice Department didn't bring any charges.
One of the authors of the Stock Act, put into place to police insider
trading on Capitol Hill, is New York Democratic Senator Kirsten
Gillibrand. She points to those investigations as proof the law is
working.

KIRSTEN GILLIBRAND: We've had several examples where members of
Congress bought or sold stocks that pertain to their work, and there
actually were follow-up investigations to see whether or not they
bought or sold those stocks based on nonpublic inside information.

WALSH: Oregon Democratic Senator Jeff Merkley voted for the 2012 law,
but is blunt on how it's working now.

JEFF MERKLEY: The Stock Act is pretty much useless.

WALSH: Lawmakers have to fill out forms listing investment activities
within 45 days. But Merkley says the major problem is enforcement.

MERKLEY: It's extremely difficult to know when a person in Congress
has traded stocks because of information they heard publicly versus
information that they've heard privately.

WALSH: Kedric Payne is general counsel for the Campaign Legal Center,
a group promoting transparency in government. They've filed ethics
complaints against half a dozen members from both parties this year
for violating the Stock Act. More are expected soon.

KEDRIC PAYNE: At least 15 members from the House and the Senate have
not complied with the requirement to disclose their stock trades, but
we are not aware of any fines that the ethics committees have
required these members to pay.

WALSH: The ethics panels can launch their own reviews, but so far, no
lawmaker has faced any formal sanction. The fine for the first late
report on a transaction - $200. Payne says the national coverage of
the cases following the pandemic appears to have given some members
pause about filing forms on time.

PAYNE: Right now, it seems to be a trend that members have accepted
that they'll just wait until the end of the year, file the report and
completely ignore the Stock Act. So they are circumventing this rule
and doing it without any consequence.

WALSH: Ethics committees don't have to report if members pay fines.
It's watchdogs like Payne's group or media outlets like Business
Insider that bring violations to light. That news outlet found Utah
Republican Blake Moore filed his disclosure forms late. He says it
was an oversight, and his office confirmed to NPR he paid a fine. The
Insider reported on others, including New Jersey Democratic
Congressman Tom Malinowski. He transferred his assets to a blind
trust after he faced questions about not reporting dozens of trades.
He said it was his own mistake, and NPR learned he paid a $200 fine.
Merkley thinks it's time to ban all lawmakers from trading individual
stocks altogether.

MERKLEY: It is a huge conflict of interest for someone to be trading
in, say, pharmaceutical stocks at the same time as making policy for
pharmaceutical companies.

WALSH: He's pushing a bill that would require members to divest
individual stocks within six months of taking office and limit their
investments to mutual funds. Gillibrand agrees. She says there's a
need for a Stock Act 2.0, one that increases transparency about
lawmakers potentially profiting from their jobs, including disclosing
small business loans they got from COVID relief bills.

GILLIBRAND: There was several examples of members of Congress who
were first in line to get those payouts. That is not what the
American public would expect members of Congress to be doing.

WALSH: Merkley admits there isn't enthusiasm about cracking down on
ethics laws on Capitol Hill.

MERKLEY: It is not a popular topic among my colleagues.

WALSH: But he says without the change, members keep themselves open
to new allegations.

MERKLEY: I can guarantee you that every year there will be a scandal
related to stock trading.

WALSH: Congress created the Stock Act to ensure transparency. But if
nothing happens and lawmakers keep failing to report their
investments, it will be tough for the public to know whether the
people they elected are making decisions to benefit their
constituents or themselves.

Deirdre Walsh, NPR News.

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