A Republican-led effort to crack down on insider trading in Congress advanced out of committee this week, even as every single House Democrat withheld support for the measure.
The House Administration Committee voted to advance the Stop Insider Trading Act, sponsored by Bryan Steil (R-WI), sending the legislation to the full House for consideration.
If enacted, the bill would prohibit members of Congress from buying individual stocks while in office and require lawmakers to provide notice seven to fourteen days before selling securities.
Members would still be permitted to invest in index funds and mutual funds and to reinvest dividends from assets they already own.
Democrats Push for Full Divestment
Democrats on the committee argued the proposal does not go far enough, pressing instead for a total trading ban that would require lawmakers to fully divest their assets before taking office.
During the two-hour markup, Rep. Joe Morelle (D-NY), the committee’s ranking member, introduced an amendment mandating full divestment for “Congress and the President and the Vice President.”
Rep. Julie Johnson (D-TX) offered a similar amendment that would have required divestment without any relief from capital gains taxes.
Steil warned that such requirements could deter qualified candidates from seeking office.
“Under the amendment offered by our colleague from Texas, that [capital gains tax] would obviously continue to apply and for some people that may be a very significant financial impact,” Steil said.
He added that the financial burden could cause “some individuals … to not come to Congress — and not because they did anything wrong, but because they had a successful private sector career.”
Concerns About Deterring Business Leaders
Steil’s concerns were echoed by Chris Josephs, co-founder of Autopilot.
Autopilot is an app that allows users to track and mirror the stock trades of lawmakers such as Rep. Nancy Pelosi (D-CA).
Pelosi’s trades have been so successful that she far outpaces Wall Street’s finest, leading to traders wanting to mimic the top Democrat in the hope of cashing in on the congresswoman’s “luck.”
“I think it would demotivate a major class of successful people from running,” Josephs said.
“Businesspeople are successful.
“They know how to run things.
“They know how to lead.
“They know how to hire,” he noted.
“They know how to create strategies.
“They know how to execute on those strategies.
“We should not just say no to those potential candidates just because they own businesses and they’re not gonna sell.”
Josephs also argued that full divestment rules could have reshaped the 2024 presidential race.
“The 2024 election, you got Trump and Vance,” Josephs said.
“Vance is an ex-venture capitalist, ex-business guy.
“He owns a lot of individual stocks that are private.
“And then you’ve got Trump, who owns a lot of stuff.
“On the other side of the ticket, though, you’ve got Kamala, who’s a career-long politician.
“You’ve got Tim Walz, who proudly doesn’t even own a house.”
He added that under such rules, President Donald Trump and Vice President JD Vance would not have been eligible to run without selling their assets.
GOP Rejects Further Restrictions
After Democrats’ full-divestment amendments failed, Rep. Norma Torres (D-CA) introduced another proposal to bar lawmakers from reinvesting dividends.
Republicans rejected the amendment, keeping dividend reinvestment permissible.
Steil defended the decision, arguing that dividends do not present the same risks as active stock trading.
“Those dividends are structured within the company with advanced notice, outside of the control of any given member,” he said.
“It does not carry the risk of insider trading.
“Because it doesn’t carry the risk of insider trading, we allowed for the reinvestment of dividends.”
Steil later underscored the bill’s core objective.
“The focus of the bill is to prohibit insider trading,” he said, “not to make elected officials poor.”
The legislation now heads to the House floor, where it is expected to face continued Democrat resistance despite broad public support for restricting stock trading by members of Congress.
READ MORE – Pelosi’s Net Worth Surged 2,297% Since First Taking Office 38 Years Ago
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