Bill to ban members of Congress and SCOTUS from trading in stocks takes shape
Long-awaited legislation that would bar lawmakers and other senior government officials from trading stocks was strengthened Thursday, as House Democrats released a legislative framework that aims to close loopholes, reduce conflicts of interest and making penalties for non-compliance more painful.
Rep. Zoe Lofgren (D-California), chair of the House Administration Committee examining shortcomings in the current financial disclosure system, outlined the framework in a Sept. 22 letter to fellow Democrats.
“As a result of this review, I believe that a meaningful and effective plan to address financial conflicts of interest could help restore public confidence that our public servants act in the public interest,” wrote Lofgren.
“Are our public officials acting in the public interest? »
Pressure has been building for some time to reform the current system of financial disclosure after media scrutiny of potential conflicts of interest in trading by US government officials and their families. A recent analysis found that nearly one-fifth of members of Congress or their family members bought or sold financial assets over a three-year period, showing a possible conflict of interest.
“These stories undermine the faith and trust of the American people in the integrity of public servants and our federal government. Members of the public may wonder if our public officials are acting in the public interest or in their private financial interest? Lofgren wrote.
The new framework, titled “Combating Financial Conflicts of Interest and Restoring Public Faith and Trust in Government,” would involve reforming the Stop Trading on Congressional Knowledge Act, or STOCK Act, which was passed in 2012 and enables lawmakers to trade stocks but requires them to disclose those transactions.
A problem with the current disclosure system is paper filing which has sometimes seen virtually unreadable forms. The framework addresses this problem by proposing that all persons subject to the disclosure requirements file their returns electronically.
The framework also aims to require public servants to provide more detail in disclosure forms. Current law allows lawmakers to disclose transaction values within wide ranges, such as $1 million to $5 million. According to the new proposal, they should provide “more granularity” by providing a rounded value for high-value assets, transactions and liabilities.
The proposal also seeks to close a loophole that allows spouses or dependents of public servants to declare high-value assets as “worth more than $1 million” and force them to provide more specific details.
SCOTUS included in stock ban
Notably, the framework also casts the net more broadly to include Supreme Court justices under the restrictions, alongside members of Congress and other senior officials, as well as their spouses and dependent children.
Under this framework, government officials and Supreme Court justices, as well as their spouses and dependent children, would not be permitted to trade in shares or hold investments in securities, commodities , futures and cryptocurrencies.
Incoming and current officials would be required to dispose of these assets or place them in blind trusts.
At the same time, officials would be allowed to invest in assets that don’t have the same potential for conflicts of interest, such as diversified mutual funds, exchange-traded funds and US government securities.
The framework also aims to impose more painful penalties for violations, which under the STOCK Act are a paltry $200 for each 30-day period of non-compliance.
The new proposal seeks to raise the penalty to $1,000, while calling for greater transparency around enforcement by requiring ethics oversight offices to publicly disclose information about filers’ compliance.
Lofgren said legislation that builds on the proposed framework would be introduced “soon”.
The House Press Gallery Twitter account said in a press release that the bill could be considered in the House as early as next week.