On April 8, as the stock market plunged after President Donald Trump announced tariff hikes last week, Republican Rep. Marjorie Taylor Greene bought thousands of dollars worth of stock. Many of these stocks soared after the president suspended most of the tariffs the next day.
Rep. Greene was one of the first members to file a mandatory disclosure report about her dealings. After the deadline for disclosure of information, Newsweek reported that at least 25 members from both parties made deals between Trump's tariff announcement and the subsequent pause.
The public disclosure of the deal highlighted an issue that has long been a source of public cynicism about Congress: whether its members are using confidential information about major political events or perhaps pending legislation or agency regulation to make money in the stock market. Unlike the general public, legislators often have access to sensitive information and decisions that can affect the profitability of industries and specific companies, which can significantly raise or lower their stock prices.
Why did we write this
Members of Congress have access to information they can use to make money in the stock market. There is a new initiative that prohibits members from buying and selling shares to combat possible insider trading.
To date, no direct evidence has emerged that Ms. Greene or other members of Congress benefited from insider trading in this case. But the focus on stock trading comes as Mr Trump faces scrutiny over whether he and his family making money as president. Watchdog groups point to weakening oversight of possible conflicts of interest, even as many private sector financial institutions, for example, have restricted employee trading in individual stocks.
In Congress, the most high-profile attempt to curb insider trading is a measure that would ban House members and senators from owning individual stocks altogether. GOP Rep. Anna Paulina Luna of Florida filed a dismissal petition last week that would force the House to vote on the ban if she can gather enough signatures. Several senior members are among the 16 who have signed onto the measure so far, well short of the 218 needed to bring the measure to a vote.
Supporters say a ban would restore accountability and strengthen public trust in Congress. House Speaker Mike Johnson told Punchbowl News this would be a disincentive for people to run for Congress.
What laws exist regarding members of Congress trading stocks?
In 1978, Congress passed the Government Ethics Act, designed to promote government transparency and prevent conflicts of interest in the wake of the Watergate scandal. The law required the top officials of the three branches of government, including all members of Congress, to annually disclose their sources of income, liabilities, gifts, and sales and purchases of stock.
In 2012, President Barack Obama signed the Congressional End Trade in Knowledge Act, or STOCK Act. The measure, passed overwhelmingly in Congress, strengthened the Government Ethics Act by placing further restrictions on the financial dealings of members of Congress.
Under the STOCK Act, which made clear that government officials are subject to the same federal insider trading laws as ordinary citizens, members must disclose any sales or purchases of stock worth more than $1,000 within 30 to 45 days, rather than just once a year. The law introduced new penalties for failure to timely disclose transaction information—typically a $200 fine for a first offense.
However, many members of Congress, as well as 73% voters, according to a 2024 YouGov poll, do not think these laws go far enough.
What questions have been raised recently among Congressional lawmakers regarding stock trading?
Since the passage of the Reserve Act, no member of Congress has been impeached for violating it. But there has been a lot of public attention to the deals from members of both parties, which seem fortunately timed.
For example, according to the Wall Street Journal, the number of purchases and sales of stocks by members of Congress increased to more than 700 in the seven days between President Trump's announcement of tariffs on April 2 and his subsequent pause on most of them. Recently NBC News disclosed that Republican Rep. Rob Bresnahan of Pennsylvania sold hundreds of thousands of dollars worth of stock in companies that manage Medicaid enrollees a week before voting on a bill that would cut Medicaid funding.
Insider trading is notoriously difficult to enforce, says Donald Langevoort, a law professor at Georgetown University. One reason is that it is difficult to prove.
To do this, under current insider trading law, there must be evidence that a member of Congress knew something that the public did not, and that that knowledge was important enough to change their financial decisions.
But there are many loopholes.
“Much of what Congress learns is speculative,” Mr. Langevoort says. And if a public news report or social media post speculates on the same information, it is no longer “non-public.”
Jeffrey Miron, a senior lecturer at Harvard University and vice president for research at the libertarian Cato Institute, says that even a law prohibiting its members and their immediate families from owning individual stocks would leave wide loopholes. For example, he says, participants can still trade stocks in a friend or relative's portfolio.
“Anyone who wants to get around these rules will find legal and possibly illegal ways to do it,” he says.
Mr. Miron says it's better to have disclosure rules so voters know what's going on than to try to stop insider trading altogether.
“I think it's all just for show, to pretend that people aren't influenced by the desire to make money from the information they can get,” he says of the proposed ban. “But of course they are … and voters need to accept that it can happen.”
What are the next steps in Congress?
Already in the 119th Congress, more than 25 bills or resolutions have been introduced that would place further restrictions on members' financial transactions.
Rep. Luna's motion to dismiss will lead to a vote on the Restoring Confidence in Congress Act. This bipartisan bill, with more than 100 co-sponsors, would prohibit members of Congress, their spouses and dependent children from owning or trading individual stocks.
House Speaker Mike Johnson has signaled his commitment to stronger measures to prevent insider trading, although he has backed away from his previous support for a blanket ban on House members owning shares.
President Trump stated in his Interview with Time magazine he would sign a ban on stock trading in Congress this year if it came to his desk. He cited former House Speaker Nancy Pelosi, whose stock market activities have also come under scrutiny.
“Well, I saw Nancy Pelosi get rich through insider information, and I wouldn’t be happy with that,” he said. “If they had sent it to me, I would have done it.”
How would this ban relate to the rules already in place for the executive and judicial branches? All three industries are subject to laws prohibiting certain types of insider trading, as well as the Ethics in Government Act of 1978.
Other disclosure laws apply to specific industries. Judges, for example, must recuse themselves from litigation that might involve their personal shareholdings. Under the 2022 law, they must also promptly disclose any new purchases and sales of shares in a public database.
Executive branch officials must disclaim any duties in which holding their shares would create a conflict of interest. Under current law, most are still able to own and trade stocks, although legislation has been passed in recent years to prohibit this exemption as well.
