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Bipartisanship is a popular word this week, and for good reason, with a significant bipartisan infrastructure bill signed into law at the White House. That was great news. But not everything is great just because Republicans and Democrats are both involved.
Take, for example, apparent conflicts of interest involving members of Congress and stock ownership. Neither party has cornered the market here, with Democrats and Republicans alike running into ethics complaints, allegations of failed disclosures and insider trading investigations.
At the onset of the pandemic, there was a small, bipartisan wave of lawmakers who were swept up in controversy around their unloading of stock right before the market plummeted. Perhaps the most publicized, and investigated, example has been Republican Sen. Richard Burr of North Carolina. The Department of Justice decided early this year not to charge Burr for the trades, though the Securities and Exchange Commission’s investigation into his trades remained open as of late October.
Other lawmakers whose trades came into question at the beginning of the pandemic included Democratic Sen. Dianne Feinstein of California and then-Sen. Kelly Loeffler, a Republican from Georgia. They and others have defended such trades by saying they were made by other people on their behalf. Those investigations were closed fairly quickly without any charges.
A common refrain from lawmakers in this position is that they did nothing wrong. And as we’ve seen with these pandemic-related cases, they are usually right. But that says more about the weakness of the law than anything.
Over nine years ago, Congress passed the Stop Trading On Congressional Knowledge (STOCK) Act meant to combat insider trading from members of Congress. But in the past decade, the limits of this law have been exposed. For a member of Congress to violate the STOCK Act, the trade or trades must be made using nonpublic information. Proving that a trade was made based on nonpublic information gained through their role as an elected official, as opposed to information available to everyone, can be difficult even if a conflict of interest is obvious for the public to see.
Lawmakers in both houses of Congress have introduced a bill, the Ban Conflicted Trading Act, that would require members of Congress to divest from individual stock ownership (while still leaving the door open to the use blind trusts or “widely held” investment funds such as a mutual fund). Rep. Jared Golden is a cosponsor of the bill.
“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,” Sen Jeff Merkley, a Democrat from Oregon who has introduced the bill in the Senate, told NPR recently. This is the kind of obvious point that shouldn’t even have to be said out loud, but it is necessary because of insufficient current law.
Allowing members of Congress to trade stock in areas that can be connected back to their supposed public service has diminishing returns for our democracy. At the very least, it creates an appearance of conflict of interests and corruption, at a time of already-eroded public trust in government. To stop these controversies about questionable stock trades from members of Congress, in both parties, considering legislation like the Ban Conflicted Trading Act would be a good first step.