There is broad public support for a ban on members of Congress trading while in office, as lawmakers’ well-timed trades and booming portfolios have raised insider trading concerns among ethics watchdogs and drawn intense public scrutiny going back decades.
But the GOP-led legislation before the House, dubbed the Stop Insider Trading Act, falls well short of what the most vocal advocates of a congressional trading ban have called for. And Democrats are lining up against the proposal.
“I’m very disappointed in it. It’s a stock trading ban that still allows stock trading. It’s a weak bill,” Rep. Seth Magaziner, D-R.I., part of a bipartisan coalition that has advocated for a more thorough ban, told CNBC.
Jonathan Ernst | Reuters
If the stock trading bill with the voter-ID mandate included advances to the Senate, where most bills require 60 votes to overcome a filibuster, its fate is unclear.
A 2012 federal law already makes it illegal for members of Congress to trade on inside information, but the penalties associated with that law are weak and rarely, if ever, enforced.
The legislation being voted on Wednesday, introduced by Rep. Bryan Steil, R-Wis., would bar members of Congress from buying individual stocks while in office, but would not require them to divest their existing investments in individual company shares. It would also allow members to sell parts of their portfolio, provided they publicly disclose their intent to sell at least seven days before.
The bill would also increase penalties for members who fail to properly disclose sales of stock, assessing fines of $2,000 or 10% of the value of the transaction, whichever is greater. The current penalty for disclosure violations is $200 for first-time offenders.
“I think it’s really important that we tell the American people we’re done allowing members of Congress to be day-trading stocks,” Steil said in an appearance on CNBC’s “Squawk Box” on Wednesday ahead of the vote. “Let’s remove even the appearance of impropriety that any given trade is based on any inside information an individual may gain while serving in Washington.”
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