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senate Bill S. 3718

Should Members of Congress be Banned From Stock Trading & Sitting on Corporate Boards?

Argument in favor

Members of Congress shouldn’t be allowed to use the information obtained in the course of legislating to conduct insider trading. Ensuring that there are consequences for this unethical behavior is an important deterrent to this type of behavior.

B.R.'s Opinion
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12/31/2018
This bill is long over due. If found guilty, they should not only pay the financial penalty, but be dismissed from their position.
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Chickie's Opinion
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12/31/2018
This should be 100% endorsed by both sides of the Legislative chamber. Greed and theft are a slippery slope and an easy path to follow. To be honorable and live with integrity, that is difficult. However, it is possible to be honorable, to be strong and serve, i.e.: Sen.John McCain. Although Sen. McCain made mistakes in his life, he acknowledged and said he was sorry. It is time Legislators serve the people they were elected to serve.
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···
12/31/2018
Selling themselves to the highest bidder is corrupting our government officials. They will never do it. They care more about power and money. Look at most after they leave congress. They are millionaires and then sell their services to corrupt the next set of congressmen.
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Argument opposed

Investment accounts are an important piece of most people’s financial plans — members of Congress shouldn’t be deprived of this important financial tool simply because they happen to hold public office.

Ken's Opinion
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12/31/2018
There should be no insider trading by anyone. It's just too easy for polititions to be bribed by lobbyists.
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Gopin2020's Opinion
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01/02/2019
Better yet ban them from being lobbyists on capital hill. #MAGA
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TuckerWantsLiberty's Opinion
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12/31/2018
No, members of Congress should be banned from passing legislation. That does far more harm.
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bill Progress


  • Not enacted
    The President has not signed this bill
  • The house has not voted
  • The senate has not voted
    IntroducedDecember 6th, 2018

What is Senate Bill S. 3718?

This bill, the Ban Conflicted Trading Act, would prohibit members of Congress and senior congressional staff from buying or selling individual stocks and other investments, or sitting on any corporate boards while the member is in office.

New members would be allowed to sell individual holdings within six months of being elected, and sitting members of Congress would be allowed to sell individual holdings within six months after enactment of the bill. Alternatively, members of Congress could choose to hold existing investments while in office — with no option for trading until they leave office — or transfer them to a blind trust. Members of Congress would still be allowed to hold widely-held investments, such as diversified mutual funds and exchange-traded funds.

If members or senior staff were found to have traded stocks while in office, the congressional Ethics Committee would fine them no less than 10 percent of the value of the investment.

Impact

Congressional staffers and members of Congress.

Cost of Senate Bill S. 3718

A CBO cost estimate is unavailable.

More Information

In-DepthSen. Jeff Merkley (D-OR) introduced this bill to prohibit members of Congress from abusing their public positions for personal financial gain:

“It’s way past time to end conflicted trading, in which legislators and top staff trade in stocks while making decisions affecting their value. This is scandalous. It undermines both the integrity of governance and the perception of integrity. Let’s end this corruption now!”

Original cosponsor Sen. Sherrod  Brown (D-OH) adds that members of Congress have access to nonpublic information, and need to be held accountable for not using that information for their personal gain:

“Members of Congress serve the American people, not their stock portfolios. Elected officials have access to nonpublic information that can affect individual companies and entire industries. There must be more accountability and transparency to prevent members from using this information and abusing their positions for personal gain.”

The Pittsburgh Post-Gazette editorial board strongly supports this bill, which it calls “so commonsense that it is almost hard to believe it is not already law”:

“It is sadly no surprise that some members of Congress, full-time legislators supposedly working for the voters who elected them, leverage their power to expand their pocketbooks. What is surprising is that congressmen are allowed to exploit their position in such a blatant way. But, as it stands, the rules prohibiting such behavior are either thin or non-existent… It is clear that the rules in Congress are too lax, allowing too many congressmen to game the system for their benefit. Efforts to curtail such activities should be applauded and encouraged. Hopefully the Ban Conflicted Trading Act will be a significant step forward.”

Sen. Elizabeth Warren (D-MA) introduced a similar bill in August 2018. Her bill, the Anti-Corruption and Public Integrity Act, would ban members of Congress from owning individual stocks.

Separate from this bill, Federal Trade Commissioner (FTC) Rohit Chopra has called for an independent Public Integrity Protection Agency, which would consolidate enforcement capabilities currently spread around the government and be empowered to investigate and penalize government officials and those seeking influence.

Additionally, House Democrats have prepared a broad anti-corruption bill for 2019 that beefs up some restrictions of members and provides new enforcement powers to the Office of Government Ethics. However, the proposed Democratic bill doesn’t include any provisions on congressional stock trading.


Of NoteAt present, the 2012 STOCK Act, which prohibits members and their staffs from exploiting insider information discovered in the course of policy deliberations and requires lawmakers to publicly disclose stock transactions within 45 days after making them public and annually revealing holding as part of their assets and liabilities, is the only current regulation governing members of Congress’ trading and investment activities. Unlike corporate “insiders,” members of Congress aren’t required to establish arms-length trading plans; and the House has not fully cooperated with the Securities and Exchange Commission’s (SEC) attempts to investigate wrongdoing.

The Senate’s ethics rules already ban members and staff from serving as board members of publicly traded companies, but there is no equivalent House rule to the safe effect. Additionally, the Senate and House both permit board membership of tax-exempt organizations.

This bill follows a series of major congressional trading scandals in recent years. In 2018, Rep. Chris Collins (R-NY) was revealed to have bought nearly $1 million in discounted shares from the Australian pharmaceutical Innate Immunotherapeutics. He sat on the company’s board, and he and his family members owned about 20 percent — with a personal investment worth $720,000 of the company. At the same time, Rep. Collins sat on the Health Subcommittee of the Committee on Energy and Commerce. On August 8, 2018 Rep. Collins, along with his son and son’s father-in-law, was arrested by the FBI for wire fraud, conspiracy to commit securities fraud, securities fraud, and lying to the FBI in connection with his activities related to Innate Immuno. Reps. Doug Lamborn (R-CO), Billy Long (R-MO), Mike Conaway (R-TX) and John Culberson (R-TX) also bought shares in Innate Immuno.

Similarly, in January 2017, it was revealed that then-Health and Human Services (HHS) Secretary nominee Tom Price (R-GA), who sat on the Ways and Means Committee and Health Subcommittee during his time in Congress, had made dozens of stock trades in the health industry over a multi-year period while also acting as a top health care policymaker. As a Congressman, Price advocated for the interests of a company he was invested in, Amgen, without disclosing the conflict of interest. And less than a week after purchasing shares in Zimmer Biomet, a medical devices company, Price introduced legislation to delay a Centers for Medicare and Medicaid regulation until 2018—a move that would protect the company’s finances. After introducing the act, Price’s reelection campaign received a donation from Zimmer Biomet’s PAC. In total, Price held stock in more than 40 companies that created conflicts of interest for his position as Secretary of HHS.

Most recently, Sen. James Inhofe (R-OK), who was elevated to chair the Senate Armed Services Committee after Sen. John McCain’s (R-AZ) death, was implicated in an insider trading scandal. A few days after meeting with President Donald Trump and Secretary of Defense Jim Mattis to successfully advocate for a military budget increase, Inhofe purchased between $50,000 and $100,000 of stock in defense contractor Raytheon, which stood to profit from additional defense spending. While Sen. Inhofe claimed that a third-party financial advisor handled his stocks and made the purchase without his knowledge, government ethicists said the incident highlighted the “moral hazard” of lawmakers owning assets in industries affect by legislation they’re in positions to author and shepherd into law.


Media:

Summary by Lorelei Yang

(Photo Credit: iStockphoto.com / Nikada)

AKA

Ban Conflicted Trading Act

Official Title

To prohibit Members of Congress from purchasing or selling certain investments, and for other purposes.

    This bill is long over due. If found guilty, they should not only pay the financial penalty, but be dismissed from their position.
    Like (229)
    Follow
    Share
    There should be no insider trading by anyone. It's just too easy for polititions to be bribed by lobbyists.
    Like (39)
    Follow
    Share
    This should be 100% endorsed by both sides of the Legislative chamber. Greed and theft are a slippery slope and an easy path to follow. To be honorable and live with integrity, that is difficult. However, it is possible to be honorable, to be strong and serve, i.e.: Sen.John McCain. Although Sen. McCain made mistakes in his life, he acknowledged and said he was sorry. It is time Legislators serve the people they were elected to serve.
    Like (129)
    Follow
    Share
    Selling themselves to the highest bidder is corrupting our government officials. They will never do it. They care more about power and money. Look at most after they leave congress. They are millionaires and then sell their services to corrupt the next set of congressmen.
    Like (89)
    Follow
    Share
    They can not write laws and then invest in those companies they just helped make profits!! This is a no brainer and the reason they get paid $135,000.00 a year with a pension and healthcare for life. They should not be allowed to take any money or invest in anything. Also publicly funded elections is the only way to stop our politicians, on both sides, from not representing us the people!!
    Like (64)
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    Not only a conflict of interest, but they have more insider trading knowledge than the average stock traders.
    Like (53)
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    They are supposed to be representing the people not the corporations. If they want to be in the corporate world, they need to leave that of public service.
    Like (51)
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    Serve the public, not yourself. If you ran for Congress and won, you did it deliberately knowing what was coming. Be honest.
    Like (36)
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    Absolutely. Our system is dangerously corrupted by citizens united and lobbyists. Any step we can take to slow the rot is required. That someone like trump should even want to be president shows the level of decay present in our oligarchy. That he succeeded in his bid to get richer off the backs of tax payers shows the decay in our education system. That the GOP does nothing to hobble his attempts to become dictator shows Golem-like gangrene in our government.
    Like (34)
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    Without a doubt! I thought this was already no longer an issue. Divest now. Damn you ‘tards! Greed reigns above all else, these days! They ALL need to disclose annually, at least, their stock holdings. They don’t need to disclose the amount, just which ones they own. This way we can watch to see if they have been compromised when they vote. We can then remove them from office, if we find they have a conflict. Damn it. This crap HAS TO STOP!
    Like (28)
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    My answer isn’t yes, it’s Hell yes! Too long we’ve allowed business to dictate our politics. When they allowed to have a say we see the chaos they bring to us. When people make judgements many things are considered, but when business is allowed a voice, their only consideration is themselves.
    Like (25)
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    Too much positive change has been either slowed or completed halted by conflicts of interest in line with those that arise from these connections. Perhaps, someday, we could extend this policy towards other government officials as well.
    Like (24)
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    Elected officials should have never been allowed to own stocks and work on laws that effect the value of the stocks.
    Like (22)
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    Can’t believe this isn’t already on the books. Good lord.
    Like (20)
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    The People’s business is paramount and the reason they’re there. While they serve at that level of government ANY possible cause or hint of conflict of interests must be avoided at all costs.
    Like (19)
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    Absolutely. They’re directly involved with changing the economic and financial climate through rules and regulations. This would present a conflict of interest. How hasn’t anyone questioned how it is some Senators are worth over $20M?
    Like (17)
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    Absolutely this should go for every influential member of any government body- including the president.
    Like (17)
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    This should have been in place a long time ago! The lack of laws like this only fuels the rampant corruption in Washington.
    Like (17)
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    Of course Congress should be banned from obvious conflict of interest.
    Like (15)
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    Yes that’s called ethical practice in government
    Like (14)
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