And Certainly NOT An Urban Legend
After reading Judd Legum’s essay, Congress' stock trading addiction, I got into a discussion with a former Member of Congress, an attorney, who started picking apart Judd’s arguments on technicalities and noted that when she was in Congress, “Eighty Members of Congress were veterans, and they voted on their own benefits each year; no one seems to have any problem with that.” More to the point, she told me that when she was in Congress, for almost 2 decades, “The subject of how other Members were cheating or stealing was a tremendous preoccupation during the whole time that I was in D.C., and this [stock trading] never came up once. The general view was that this whole subject was in the realm of an urban legend, except when Congress was directly involved in something overwhelmingly important, like the bailout vote in 2008.”
Legum began with a perfectly plausible story about insider stock trading, which is completely illegal. “On March 12,” wrote Legum, “Bloomberg reported that the Department of Defense was canceling a $2.5 billion grant to chip-maker Intel. The money was supposed to make Intel ‘a dedicated supplier of chips for military and intelligence needs, designating a so-called Secure Enclave within the company’s factory.’ While it is possible that Intel may be able to recover some or all of the funds from the Commerce Department, according to Bloomberg, the announcement could ‘limit the total amount that Intel has been expecting to get in federal funding.’ After the news broke, Intel's stock ‘slipped as much as 1.7% in late trading.’ Overall, Intel's stock has declined nearly 6% in the days after the announcement. Several members of Congress, and their families, sold significant holdings in Intel stock in advance of the news. Senator Tommy Tuberville (R-AL), a member of the Armed Services Committee, sold up to $50,000 in Intel stock options on January 24, 2024. (Congressional stock trades are reported only in ranges.) The options were for the right to sell Intel shares at $45.”
Congresswoman X acknowledged that Tuberville is a joke and a moron but she still at least a little skeptical. “It’s possible for sure,” she said in a way that I took to mean that she thought that actually it wasn’t. “But if I had to guess, I would seriously doubt that anyone other than maybe the Chair and the Ranking Member knew about it ahead of time, and probably not them, either.”
“Tuberville was not the only member of Congress connected to transactions of Intel stock,” wrote Legum. “Senator Richard Blumenthal (D-CT), who is also a member of the Armed Services Committee, reported that his spouse sold up to $500,000 of Intel stock on December 29, 2023. A spokesperson for Blumenthal said the stock sale was associated with his wife’s ‘family investment fund,’ and the ‘funds’ financial advisors make investment decisions entirely independently of her. [This is what all Members caught trading on inside information— and, in fact, it’s what tuberville said as well.] Michael McCaul (R-TX), chairman of the House Foreign Affairs Committee sold $50,000 worth as well and used the same excuse.
Under federal law, when a federal government employee owns stock in a company, the employee is prohibited from participating in any matter that may impact the financial interests of that company— whether or not the matter can plausibly impact the stock price. It is considered a conflict of interest and the employee must recuse themselves. The restriction also applies to any stock owned by a spouse or minor child of the employee. Each violation of the law carries a maximum penalty of five years in jail and a fine of $50,000.
Members of Congress have more power and access to more information than a typical member of the federal bureaucracy. Yet, under the law, members of Congress are not considered employees of the federal government. They are free to actively trade an individual stock
The only restrictions on Congressional stock trading were imposed by the Stop Trading on Congressional Knowledge Act of 2012 (STOCK Act). The law only prohibits trading stock based on inside information— a term that is difficult to pin down. It is nearly impossible to prove that a member of Congress executed a trade based on information the member learned in a confidential briefing as opposed to other publicly available information.
But potential conflicts related to Congressional stock trading are a systemic problem. A 2022 investigation by the New York Times found “97 lawmakers or their family members bought or sold financial assets over a three-year span in industries that could be affected by their legislative committee work.” Moreover, "studies consistently show that the investments of members of Congress outperform the market."
Senators like Richard Burr (R-NC), Kelly Loeffler (R-GA) and Dianne Feinstein (D-dead) were especially notorious. Nancy Pelosi (D-CA), Zoe Lofgren (D-CA), Josh Gottheimer (D-NJ), Susie Lee (D-NV), Mikie Sherrill (D-NJ), Lois Frankel (D-FL), Lizzie Fletcher (D-TX), James Comer (R-KY), Warren Davidson (R-OH), Diana Harshbarger (R-TN), Kevin Hern (R-OK), Rob Wittman (R-VA), Billy Long (R-MO), Virginia Foxx (R-NC) and Tom Massie (R-KY), to mention just a few, have been as well.
I’ll bet you won’t be surprised to know that though they’ve promised reform neither Democratic nor Republican leaders— all crooks themselves— have allowed reform to progress, despite publicly pledging to champion ethics in this regard. Over 80% of Americans support a ban on Congressional stock trading. Congressional leaders of both corrupt parties pay that lip service and then kill all attempts at reform. Their members insist on that.
Pelosi has been the worst of the worst, only agreeing, reluctantly, when she faced a rank-and-file revolt nd when she was certain the bill would be ‘filled with loopholes, including allowing members to evade the ban completely by establishing a ‘fake blind trust.’ Congress never voted on the legislation. Pelosi said no vote occurred because the bill lacked support for passage. In July 2022, former House Speaker Kevin McCarthy (R-CA), who replaced Pelosi as Speaker when Republicans took control of the House, said he would ‘bring trust back to this institution’ by banning members of Congress from trading individual stocks. But, a year later, McCarthy had done nothing. Several Democratic members of Congress who supported a stock trading ban wrote McCarthy in July 2023, noting that he had ‘put 215 bills and resolutions on the floor’ but had ‘not acted on your promise.’ A few months later, right-wing Republicans ousted McCarthy from the speakership.”
MAGA Mike hasn’t “spoken publicly about Congressional stock trading. In January 2024, a bipartisan group of Representatives wrote to Johnson and Minority Leader Hakeem Jeffries (D-NY) asking them to ‘bring a bill to the floor for a vote to end stock trading by Members of Congress.’ There is no indication that they received a public reply, and there are no signs that a stock trading ban will be considered this Congress.”
There's one solution, electing men and women to office with morals and integrity, not the sleazeballs the political parties vomit up. Let me recommend the Blue America candidates in Oregon. Jamie McLeod-Skinner is running for a seat in a Republican-held swing district. Last night she told us “Trading stocks creates too many conflicts of interest for Members of Congress. The reason I don’t— and never have— taken corporate PAC money is because the interests of powerful corporations and everyday people often collide, and you can't be accountable to both. When it comes down to the powerful corporate interests versus everyday Americans, I'm proud to stand with the people.”
And Susheela Jayapal, also running for Congress in Oregon, approaches the question from a similar perspective: “There is no reason that members of Congress should be held to a lower standard than federal employees when it comes to conflicts of interest. At a time when trust in Congress is at an all time low, this is low hanging fruit— voters should not have any doubt whatsoever about whether members are acting in their own best interest or in that of their constituents. Members should not be allowed to trade in individual stocks— period.”
How many Members of Congress would have to go to prison— and serve serious time— to incentivize other members to stop breaking the very lenient law in regard to trading stocks? More than one, that’s for sure. I wonder if rounding up a dozen, putting them on trial and sending them up the river for a decade would do it at least for a while. I might point out that in August 2018, MAGAt Chris Collins (NY) was indicted on charges of securities fraud, wire fraud, and making false statements to the FBI related to insider trading. Collins was had been providing insider info about a company's failed drug trial to his son, enabling him and others to avoid significant financial losses. A little more than a year later— after denials up the wazoo— Collins pleaded guilty to charges of insider trading and lying to the FBI and resigned from Congress. In January 2020, he was sentenced to 26 months in prison, fined $200,000 and ordered to forfeit nearly $1 million in ill-gotten gains. No one learned much of a lesson from that though, because he managed to pay off Trump, who pardoned him and he’s now talking about running for Congress again, albeit in Florida, where no one cares about ethics anyway.
Yesterday Blue America-endorsed Jerrad Christian became the official Democratic Party candidate against knee-jerk GOP hack Troy Balderson in a sprawling eastern and central Ohio congressional district. Please consider contributing to his campaign today. This morning he told us that he found it “concerning that lawmakers have access to privileged information and may act on it for financial gain before it becomes public knowledge. This practice not only raises ethical questions but also erodes public trust in our systems, which is already at an all time low. Stricter regulations and transparent enforcement of existing laws, like the STOCK Act, are essential to restore faith in legislative integrity and ensure that public service remains focused on the common good rather than personal gain. We cannot continue to draw a line between the government and ourselves. We are the government and we can change it all with our votes. If we want a better world, we must vote.”
