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Kevin McCarthy says if Republicans regain the House majority next year, he would consider prohibiting or limiting lawmakers’ purchase and trading of stocks after Nancy Pelosi expressed opposition to such a rule.
According to the latest report, the House minority leader’s plan is still in its infancy, but one idea involves allowing legislators to only hold professionally managed mutual funds.
After lawmakers were briefed on the dangers of COVID-19 early in 2020 before the public was given the information, the drive for a ban on trading and holding stocks has intensified in recent months.
As a result of the accusations, the Justice Department began investigating the financial activities of Senators Dianne Feinstein, James Inhofe, and Richard Burr, along with former Senator Kelly Loeffler. The four investigations have since been closed and none of the lawmakers who engaged in stock trading following that briefing have been alleged to have committed any crime.
Pelosi’s opposition to regulatory oversight of lawmakers’ market activity also gained momentum after her husband Paul, 81, bought millions in shares last month. Her opposition is likely to force her into retirement as she wont be able to milk the cow any longer.
According to the 2012 Stop Trading on Congressional Knowledge Act (STOCK Act), members of Congress and their staff are prohibited from using nonpublic information for personal benefit, including stock trades and holdings. In addition, stock and bond transactions must be publicly disclosed within 45 days.
As a result, Congress’ private funds are mostly unfettered.
As Senators and Representatives often learn sensitive and confidential information about U.S. policy that could have an impact on markets, the new restrictions would further restrict trading and holding stocks.
GOP lawmakers are considering a proposal that would bar them from holding stock in companies or industries that relate to their committees, according to McCarthy.
There are some lawmakers who advocate for all holdings of members to be held in blind trusts.
The newly elected Democratic senator from Massachusetts, Jon Ossoff, 34, is also reportedly considering legislation that would restrict members and their families from trading in stocks for the duration of their congressional terms.
In March, the Senate introduced the Ban Conflicted Trading Act, a similar bill to Ossoff’s. Unlike Ossoff’s limit on family members, however, the trading ban applies only to members of Congress and their staff.
Senator Ossoff is likely to be opposed by most members of his own party, especially after Speaker Pelosi opposed the measure. She would also be affected by the bill since her husband is a prolific trader.
Just last month, Paul Pelosi traded individual stocks to the tune of millions of dollars. He purchased shares in many companies during December, including Google parent Alphabet, Disney, Roblox, and Salesforce.
‘We’re a free market economy,’ Pelosi said at a press conference last month. ‘[Lawmakers] should be able to participate in that.’
Within two days, Paul purchased Alphabet stock worth $500,001 to $1 million. In addition, he purchased Disney shares between $100,000 and $250,000.
Three days later, on December 20, he twice bought Salesforce stock – one transaction being worth $100,001 to $250,000, and one worth $500,001 to $1 million, and he bought Roblox shares worth $250,001 to $500,000.
In addition, he purchased stock in Micron Technology worth $250,001 to $500,000 on Dec. 21. Then, he bought Reoff XX worth $50,000 to $100,000 on December 22.
Between $1,750,007 and $3,600,000 worth of stock was purchased by Paul Pelosi in the course of five days.
As a prolific trader, Paul Pelosi is even letting his users track his trades and be notified when he makes a purchase through the social investing app Iris so that they can do the same.
A Congressionally-approved blind trust is an arrangement where lawmakers give up control over their assets to a third party, and Ossoff is one of a select 10 lawmakers in the current 535-member Congress to do so.
A report says that all of his colleagues may be forced to follow suit if his proposed legislation is made law.
Another Democrat, the Lieutenant Governor of Pennsylvania, John Fetterman, called on Congress Tuesday to ban lawmakers, their spouses, and their top staffers from engaging in stock trading.
A growing number of high-profile congressional candidates have endorsed the proposal, including Fetterman, one of the top Democratic candidates for Pennsylvania’s midterm Senate election.
“Allowing members of Congress and their spouses to trade stocks is a clear conflict of interest. Lawmakers should not be making profits off of the same companies they are supposed to be regulating, based on closed-door information that isn’t available to the public,” Fetterman said in a statement.
76 percent of voters, including 70 percent of Democrats, 78 percent of Republicans, and more than 80 percent of independents, have expressed their support for barring members of Congress from trading individual stocks, according to a recent poll.
Several candidates running for office in both parties are supporting a ban on the practice. Among those who support the ban who is running for U.S. Senate are, Republican Blake Masters of Arizona, Democrat Lucas Kunce of Missouri, and Democrat Tom Nelson of Wisconsin.
From January through September 2021, 49 legislators and 182 congressional staffers were found to have been violating the STOCK Act by failing to report their transactions on time.
A combined total of $225 million in stock assets was held by 220 representatives and senators in 2020, or around 40% of the total number of members of Congress.