Stock Trading in Congress: 117th Congress Proposals to Limit or Prohibit Certain Financial Transactions

Stock Trading in Congress: 117th Congress Proposals to Limit or Prohibit Certain Financial Transactions

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INSIGHTi

Stock Trading in Congress: 117th Congress
Proposals to Limit or Prohibit Certain
Financial Transactions
February 17, 2022
On April 4, 2012, President Obama signed the STOCK Act (P.L. 112-105; Stop Trading on Congressional
Knowledge Act of 2012). The STOCK Act, as amended, affirms that Members of Congress, congressional
employees, and other federal officials are not exempt from “insider trading” laws and regulations and are
required to file periodic transaction reports with their supervising ethics office within 30 days of a
covered financial transaction. For the House of Representatives, the supervising ethics office is the House
Ethics Committee, and for the Senate it is the Senate Select Committee on Ethics.
In the 117th Congress (2021-2022), there has been interest in further limiting or prohibiting Members of
Congress and covered congressional employees from engaging in certain financial transactions. As of
February 14, 2022, at least 12 bills or resolutions have been introduced to address this issue. These
measures propose to amend the Ethics in Government Act (5 U.S.C. Appendix §§101-112), the STOCK
Act, or House Rules to prohibit certain transactions, increase financial disclosure reporting requirements,
and prescribe remedies and penalties for engaging in certain behaviors. Figure 1 lists the 12 measures, the
proposed affected party, the bill’s or resolution’s proposed actions, and the timeline for implementation, if
enacted.
Congressional Research Service
https://crsreports.congress.gov
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Figure 1. Proposals to Limit or Prohibit Certain Financial Transactions, 117th Congress

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Source: CRS summary of proposed legislation.
Notes: To compile this list, CRS searched Congress.gov using subject headers “Government Ethics” + “Members of
Congress” + “Securities.” CRS supplemented this search by examining House dear col eague letters and Member press
releases for similar legislation. It is possible that other measures that might address similar policy matters but use different
wording were not captured by this search. Jennifer Manning, Senior Research Librarian, conducted the search on February
14, 2021.
a. Text of H.R. 6694 is not yet available on Congress.gov. For a summary of the bil , see a summary of the measure on
the sponsor’s webpage.
b. Text of S. 3631 is not yet available on Congress.gov. For bil text, see the link from the bil sponsor’s webpage.
Proposals to Limit or Prohibit Certain Financial
Transactions
This Insight broadly describes the 12 measures proposed to regulate financial activities of Members of
Congress and covered congressional staff. Generally, the proposals would prohibit covered individuals
from the holding, purchase, sale, and/or active management of certain types of financial assets; amend the
Ethics in Government Act and/or the STOCK Act; require certain assets to be placed in blind trusts;
and/or amend House Rule XXIII to prohibit certain financial activities.
Prohibit Holding, Purchasing, and Selling Certain Assets
Eight proposals would generally prohibit covered officials from the holding, purchase, sale, and/or active
management of certain types of assets. Aspects of these measures (H.R. 1579, H.R. 6490, H.R. 6694, S.
564, S. 3504, S. 3612, S. 3631, and S. 3550) would prohibit the purchase or sale of specified financial
instruments, require additional disclosures and potential divestment, and/or increase penalties for
noncompliance. Currently, Congress does not prohibit the ownership of specified financial assets, but
some executive branch agencies do. For example, the Nuclear Regulatory Commission has supplemental
Standards of Ethical Conduct that include a list of prohibited securities (5 C.F.R. §5801.102).
Amend Ethics in Government Act and/or the STOCK Act
Five proposals (H.R. 6490, H.R. 6694, S. 3494, S. 3504, and S. 3612) would amend the Ethics in
Government Act and/or the STOCK Act. Broadly, they propose to amend the Ethics in Government Act to
prohibit certain transactions and the holding of covered financial instruments. In some cases, the
proposals would authorize the use of qualified blind trusts to avoid or prevent potential conflicts of
interest. Further, two proposals (H.R. 6490 and S. 3504) would provide the supervising ethics office with
the power to impose civil fines and require the Government Accountability Office (GAO) to audit
compliance with the law.
Require the Use of Blind Trusts
A number of the proposals would allow or require a Member of Congress (and their spouses and/or
dependent children) to place any covered assets in a qualified blind trust. Under the Ethics in Government
Act, a qualified blind trust “confer[s] on an independent trustee and any other designated fiduciary the
sole responsibility to administer the trust and to manage trust assets without participation by, or the
knowledge of, any interested party or any representative of an interested party” (5 C.F.R. §2634.401(a)).
Pursuant to the Ethics in Government Act (5 U.S.C. Appendix §102(f)(3)), a qualified blind trust must
meet certain requirements, including that the trustee must be an independent actor, no restrictions can be
placed on asset disposal, communication must be limited between the trustee and interested parties, and
the supervisory ethics office must approve the trust.

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Amend House Rule XXIII
Two proposals (H.R. 459 and H.Res. 873) would amend House Rule XXIII, the House Code of Conduct,
to add a new section that would state
PROHIBITING MEMBERS OF HOUSE OF REPRESENTATIVES FROM OWNING
INDIVIDUAL STOCKS.—A Member, Delegate, or Resident Commissioner may not own the
common stock of any individual public corporation.
Amending House Rules to prohibit ownership of individual stocks might require the divestiture of certain
assets by Members of the House. As an amendment to the Code of Conduct, jurisdiction over the
implementation and enforcement of this proposed rule change would likely be under the jurisdiction of
the House Ethics Committee. A similar proposal to amend Senate Rules has not been introduced.

Author Information

Jacob R. Straus

Specialist on the Congress

Disclaimer
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to congressional committees and Members of Congress. It operates solely at the behest of and under the direction of
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