Armstrong Williams Calls for End to Insider Trading on Capitol Hill
Members of Congress enjoy several privileges from their positions, including a yearly salary of $174,000, which is significantly more than the average American’s income. They also receive a generous per diem for lodging and meals on official trips, top-tier health insurance, and a reliable pension plan. However, one particular benefit has stirred controversy and outrage among many Americans in recent times, namely the suspected trading of stocks by members of Congress based on confidential information without facing any consequences.
A recent investigation by Unusual Whales, a platform that monitors stock transactions made by lawmakers, revealed that at least 20 members of Congress achieved returns that exceeded those of the Standard and Poor’s 500 index. Surprisingly, five members saw returns surpassing 100%, two members received over a 95% return, and an additional four members earned returns of over 70%. Despite common belief, it is illegal for members of Congress to trade stocks using insider information. In response to a 2011 exposé on “60 Minutes” accusing lawmakers of leveraging insider knowledge for financial gain, former President Barack Obama enacted the Stop Trading on Congressional Knowledge Act in 2012. This legislation was designed to mandate that Congress members disclose stock transactions within 30 to 45 days of making them, firmly establishing that legislators are not exempt from insider trading laws.
However, despite these legal provisions, evidence suggests that members of Congress are still engaging in stock trading based on nonpublic information. For example, former Senator Richard Burr, previously the chair of the Senate Intelligence Committee, sold stocks valued at up to $1.7 million a month prior to the financial downturn caused by the COVID-19 pandemic. Similarly, former Senator Kelly Loeffler disposed of shares estimated at $3.1 million following a confidential Senate briefing on COVID-19 in January 2020. Another instance involved Representative Mike Kelly’s spouse purchasing shares of Cleveland-Cliffs Inc., a steel company, right before the Commerce Department announced a move that would benefit the firm. These cases highlight a pattern of lawmakers involving themselves in timely stock trades related to companies affected by legislation within their committees, or sharing confidential data with fellow committee members.
Although Obama’s implementation of the STOCK Act aimed to curb unethical trading practices among lawmakers, it appears insufficient. There should be a clear and total ban on members of Congress engaging in stock trading. The rationale behind this prohibition is straightforward – legislators responsible for crafting laws must avoid any perception of misconduct to uphold the integrity of their work. When a member of Congress undertakes stock trading, it inevitably raises suspicions about whether the transaction is based on confidential information not available to the public.
