Sen. Elizabeth Warren, a Massachusetts Democrat, said in an interview with Business Insider on Wednesday that she plans to introduce legislation banning individual stocks trades or ownership by members of Congress.
Her announcement comes after multiple members of Congress were accused of trading stocks directly affected by their own insider knowledge and voting decisions during the Covid-19 pandemic.
“You shouldn’t have to wonder whether your members of Congress are looking out for you or lining their own pockets,” Warren tweeted Wednesday. “My plan to #EndCorruptionNow will ban senators and representatives from owing or trading individual stocks while in office.”
When Financial Advisor contacted advisors about the possible prohibition, most (but not all) spoke in support of it. “Just as there are laws to prevent corporate executives from trading on non-public information, elected officials receiving classified briefings should not be able to trade on that information either,” said David N. Bize, an investment advisor with First Allied in Oklahoma City. “Oklahoma Senator Jim Inhofe selling stocks after receiving non-public information about the Covid-19 pandemic is a good example.”
The U.S. Justice Department has cleared Inhofe of wrongdoing in the sale of stock in five companies three days after a congressional briefing on Covid. Inhofe was among four senators whose stock trades were questioned after they followed a January 24 briefing to senators about the pandemic’s imminent spread to the United States. Inhofe said he wasn’t at the meeting.
Financial records show that Inhofe sold at least $180,000 worth of stocks on January 27, three days after the briefing.
“Yes, absolutely, lawmakers should be prohibited from trading. What they are doing, and did do so as recently as a year ago, is the worst kind of insider trading,” said George R. Gagliardi, founder of Coromandel Wealth Management in Lexington, Mass.
This is not Sen. Warren’s first attempt to prevent lawmakers from trading stocks. In 2018 and 2020, she introduced the “Anti-Corruption and Public Integrity Act,” which was also designed to curb lobbying and corruption. That legislation would have also brought more ethical scrutiny to lawmaking by creating an ethics agency to oversee federal employees.
The Senate was led by the GOP in those years, and the bill failed both times. It had zero co-sponsors in the Senate and only six co-sponsors in the House of Representatives.
Democrats control both chambers of Congress now, and Warren sits on the Senate Finance Committee. However, both Democrat and Republican lawmakers tend to bristle at the thought of stock trading bans.