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


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. Transcript provided by NPR, Copyright NPR.

Deirdre Walsh is the congress editor for NPR's Washington Desk.