Ossoff’s Bill Would Ban Members of Congress, Families From Trading Stocks
There’s a reason why the Pelosis have become incredibly rich while she’s been in the House.
Georgia Democratic Sen. Jon Osoff wants to introduce a bill that would ban Congress members and their families from trading individual stocks. It would stick while the person is in office.
This tweet came out today. It is bipartisan. But God forbid if we made even one “unusually well-timed trade.” Don’t forget Martha Stewart went to jail for this.
🚨BREAKING NEWS🚨
I have just released the full trading report on politicians in 2021.
In short, many beat the market.
They traded more than ever before.
And they made numerous unusually timed trades, resulting in huge gains.
Read it here: https://t.co/CQ6JphecwZ pic.twitter.com/ra9DEjV0ok
— unusual_whales (@unusual_whales) January 10, 2022
The New York Post reported that the bill “would also likely require lawmakers [to] put their assets in blind trusts.” Ossoff did this after he came into office in January 2021.
A blind trust is meant to avoid conflict of interest:
A blind trust is a trust established by the owner (or trustor) giving another party (the trustee) full control of the trust. The trustee has full discretion over the assets and investments while being charged with managing the assets and any income generated in the trust. The trustor can terminate the trust, but otherwise exercises no control over the actions taken within the trust and receives no reports from the trustees while the blind trust is in force. Blind trusts are often established in situations when individuals want to avoid conflicts of interest between their employment and investments.
The trustor and trust beneficiaries “have no knowledge of the investment holdings within the trust.” They cannot have “any control or say in how the investments are managed, including whether to buy or sell specific securities.”
Ossoff plans to file the bill once he gets a Republican co-sponsor. He might not get one because no Republican senator has come out against trading stocks.
The Senate has the Ban Conflicted Trading Act introduced by four Democratic senators. It only bans trading by Congress and their senior staff members.
The House has the TRUST in Congress Act, which is sponsored by Democrats and Republicans Chip Roy, Michael Cloud, Scott Perry, and Fred Keller. That bill would block Congress and their close family members from trading.
However, Ossoff and the House members will likely receive a beatdown by Nancy Pelosi because her husband has brought in millions of dollars trading stocks while she’s been in office.
The Pelosis took home millions last month:
The Democratic majority leader and her husband, Paul Pelosi, recently bought millions of dollars worth of call options for stocks including Google, Salesforce, Roblox and Disney, financial disclosures published Thursday show.
The purchases occurred from Dec. 17 to Dec. 21 — just days after Pelosi insisted in a press conference that members of Congress should be allowed to trade individual stocks despite often being privy to insider information that can move markets.
“We’re a free-market economy,” Pelosi told reporters, adding that members of Congress “should be able to participate in that.”
They sure love the free market when it helps them out!
The STOCK Act of 2012 forces Congress to disclose trades within 45 days. But we all know our employees in the Capitol never lie and are the most honest people in the world!
Except that Democrats and Republicans have violated that law a lot since it passed.
I doubt it will become law but I’m glad someone is talking about it. But Ossoff has been consistent. As I said, he put his portfolio in a blind trust. In October, he demanded Federal Reserve officials not trade stocks “following revelations that two regional reserve bank presidents had actively traded shares in 2020.”
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Comments
“introduce a bill that would ban Congress members and their families from trading individual stocks.”
A fascinating example of how a person (me) can be simultaneously astonished and not astonished that there is currently no such requirement.
“But God forbid if we made even one “unusually well-timed trade.” Don’t forget Martha Stewart went to jail for this.”
No, let’s be clear. Martha Stewart went to jail for telling a federal LEO that she hadn’t done something that was perfectly legal to do, when a later investigation disclosed that she had.
Isn’t that so much clearer now?
Term limits, and the Constitutional Amendment needed to enforce them, would be the preferred method.
How can you ban other family members from trading? That’s how Nancy avoids this inconvenience now.
Too many loopholes to make this anything but a PR stunt.
Precisely. She was charged with violating 18 USC 1001, False Statements. She was not charged with any violation of SEC rules. regulations, or statute.
“”that there is currently no such requirement.””
I think that there used to be such a restrictions, but I’ve read elsewhere that they were repealed under Obama.
This legislation is such a sham. They passed a bill like this years ago, no one pays attention to it, clearly.
No, the bill they passed said Congress people have to give 45 days notice of trades. They do not have this on the books.
And they routinely violate that law. It has no teeth.
The only traction this bill will get is in the local media here in GA. The bill is DOA for any positive movement in Congress.
Agreed, which is a shame.
Like a blind squirrel searching for a nut, Jon T. Ossof gets one right.
I’ll give him full credit. And he has a full term ahead of him, he doesn’t have to run again this year.
But I fully condemn all Republicans who won’t cosponsor with him, all 50 of them maybe.
SAME. Shame on them.
Agreed. He also put all his stuff in a blind trust as he promised.
In this way, a Democrat is better than the Republicans. What garbage our government is.
It’s why I was registered Independent for so long. I registered libertarian here in Oklahoma once I could but I do not belong to the party at all. I used to, but let go of it a few years ago.
I’ve been unlucky in home states since in both Massachusetts and in Florida there are closed primaries. The only way I have any say at the primary level is to register as (D) in Mass. and as (R) in Florida. Granted, I could choose Indie, but then I can’t vote in the primaries, and they are important in their own right.
Darn right you shouldn’t be able to vote in a party’s primary unless you belong to it.
Agreed. Party primary should be closed. Too much opportunity for mischief if not.
In most countries with which I’m familiar, you can’t participate in selecting a party’s candidates unless you’re a dues-paying member.
I think you are mistaken about MA. I live in the state and register as “unenrolled.” I can still vote in the primaries here. I simply select which primary ballot I want on election day. In most elections I end up asking for a D primary ballot, even though I almost never vote D in a general, because there are seldom meaningful R primaries in this heavily blue state.
Isn’t that why you go to Congress, and much of public service, to create wealth?
Insider trading is actually a good thing. Sellers get a higher price than they would have otherwise when an insider buys shares, and buyers get a cheaper price than otherwise when an insider sells shares. Essentially it makes the insider price information more public when insiders act.
Of course probably more money has been lost trading on insider information than anything else, in the generality of things.
The problem with trading on insider information is that the information belongs to the company’s shareholders, and is being used against their interests.
As I understand it insider trading laws were a reaction to Ivan Boeski, and what he was doing was outright betrayal of his fiduciary duty to his clients. His clients would tell him in confidence that they planned to buy stocks, and he would buy those stocks first, thus raising the price his clients had to pay when they subsequently made their planned purchases.
What you describe is front running which I supposed could be viewed as a form of insider trading but most people think about the use of “non-public” information when making trades as insider trading. In the case of these government agents, it could be something like the DoD making a large contract award for cloud computing. Many recent cases have involved low level investment bankers or junior attorneys who are on M&A deal teams and tip off their friends or relatives who buy shares or call options in the target company before the deal is announced.
FWIW, front running is practiced legally by many large hedge funds, some of whom have built highly optimized optical networks in order to front run large orders by micro seconds. Many of these hedge funds pay retail brokers for trade data and use it to front run. It may allow them to gain a few pennies/share per trade but when you do this millions of times a day it adds up. Robinhood has come under much scrutiny because they make money by selling the trading data of their customers who trade for “free.”
The blind trust part seems unnecessary if you’re invested in broad-market tickers like SPY, VTI, SPX, RUT, and NDX.
Not really. Let’s say they are invested exclusively in a small cap index then craft tax and regulatory legislation that only applies to companies with the market cap to join the SP 500. Or advantages/disadvantage bonds v stock or the reverse. Lots of ways to profit in your scenario.
The true issue is honesty. The statue could probably apply to the family members of the household and survive but not adult children or siblings or nieces and nephews. As we know dishonest people are adept at skirting rules, especially when they are the ones writing the rules. Fundamentally I don’t see how this gets solved without robust enforcement via Congress itself; disclose trades and if on a committee with insider info and made a trade then create a presumption that the trade was improper.
The true issue is honesty.
No, the true issue is power. Remove it from the hands of lawmakers.
The problem is that the people who could act to remove power are the same people who exercise it. Not a great many historical examples of this occurring voluntarily.
So we are back to honesty or ethical behavior if you like. An ethical gov’t won’t exist in the absence of ethics on the part of the members of govt. That can be internal ethics; arising from honest people themselves or applied externally in the form of rules with a vigorous enforcement system. Neither are very likely, IMO.
I can see banning members of congress and staffers from trading, as a condition of their employment. But I don’t see how congress can ban their family members from trading. Wouldn’t that violate the equal protection clause? Discriminating against someone just because they’re related to a member of congress?! One could almost call it a bill of attainder.
Depends. Why is Pelosi’s husband not being investigated and prosecuted for insider trading?
If there’s a law protecting him due to her role, then the proposed ban on trading should apply to him.
If there isn’t, just why the fuck isn’t the law being followed?
Because there is no evidence at all that he has engaged in insider trading. There’s no evidence that he has earned even one dollar from information his wife gave him. You may suspect it, but that’s not a legitimate basis for an investigation. Come up with evidence and there can be an investigation.
There hasn’t been an investigation to my knowledge. That could change in November. His trading is quite brazen. He doesn’t just buy common stock, he plays the options market an invitation to get slaughtered unless…
Trading data itself is evidence of insider trading.
No, it isn’t. You need evidence that he had specific information at the time of the trades, and that he based the trades on that evidence. As far as I know, no such evidence has yet come to light. That doesn’t mean he isn’t doing it, it means he hasn’t yet been caught. And you can’t even investigate him without enough evidence to constitute reasonable grounds for suspicion.
Because whether you like it or not they are trading from positions of privilege.
Also, this harks back to an earlier comment I made on leadership…leaders would ensure there are no questions asked about how they conduct themselves AND that includes members of their household who have the potential to benefit from preferential treatment (or positions of privilege).
A law like this, to me, seems like common sense…much like term limits. But there we go. This law is dead BEFORE arrival! These clowns wont do something to inconvenience their positions of privilege.
Really?! How exactly could a “leader” ensure such a thing? Forget about the fact that not even the most honest and prudent person can prevent anyone from asking questions, even about their own actions. Let’s just concentrate on the immediate topic: How can a member of congress control what his family members do? They are adults and not slaves, and make their own decisions.
What you’re saying is as stupid as Michael Moore asking congressmen why they hadn’t “sent” their children to war. Some of the ones he asked actually did have children who had chosen to join the armed forces, which showed he hadn’t even bothered to do his homework, but the main problem with his challenge is that nobody “sends” their children to war, it’s the children’s own choice. Parents get to give their children advice, but it’s the children who decide what they will do.
I’m pretty sure he meant to say the equivalent of “not even an appearance of impropriety.” Not that a leader would censor questions.
Every government employee cuts off their family from economic transactions where they have decision making power. At least, that’s what my ethics training tells me every year.
Your “ethics training” is wrong, because no government employee can do that. All a family member has to do is say “no”.
I recall the case of a very senior politician in another country, whose wife point-blank refused to fill in the financial disclosure forms that “ethics” regulations required. There was nothing anyone could do about it. She said her finances were none of her husband’s business, let alone the rest of the country’s, and she could not be compelled to disclose them just because her husband chose to run for office.
Direct family members of many people who work in the securities industry are subject to highly restrictive trading rules so why not member of Congress.
Has any family member ever tried saying “no”? Challenged the rule?
Supposing this is so, and that the rules were upheld, I can only imagine that it was framed as a condition of the person’s employment, i.e. if your relative trades stocks, as is their right, you will be fired. Doesn’t seem fair, so I’m dubious the courts would uphold it, but let’s suppose it’s so. You can’t fire congressmen. And you can’t even make not having such relatives a condition of running for reelection. So I don’t see how it could be done.
At one time they had to put their stock in a blind trust. They got around that and since profit what this is all about they will get around most anything.
FWIW, there has never been a statutory obligation to for any members of the government – Executive, Legislative or Judicial – to place their equities or other financial instruments in a ‘blind trust.’ Instead, to the extent that this practice has happened, it’s been largely voluntarily or conditioned on non-legally binding ‘agreements.’
It’s unclear if such statutory language was adopted, it would survive judicial review. The Court has long taken a dim view of Congress and/or states creating additional statutory barriers holding federal office beyond what is already prescribed in the US Constitution. And/But, the Court has given Congress a wide berth in establishing its own rules of conduct. So, perhaps the door is open there.
I think it’s stupid to restrict congresscritters from doing things normal people are allowed to do.
However, I am all for this! Because the choice is this: you don’t get to enjoy the normal perks of citizenship while you have the power to exclude yourself from laws or while you can play games with insider information, OR you can reduce your power to an appropriate level so you don’t have much you can profit from.
I don’t see the latter happening without some “pour encourager les autres” going on.
This is a problem, but I’m not sure the twitter graph is that damning.
Beating the market could also mean you have good investors and have lots of money to risk for a big reward. I’d be interested to see graphs that relate age to retirement by “beat the market” success by Congressman as that would be an index of risk/reward strategy. Also, personal wealth status means you have more to risk if you so choose.
Also, you’ll notice Bernie and Lizziewatha are not on there because they play in real estate instead.
No elected official should be allowed to trade on information that is not available to the public. Further, they should not be able to trade on information regarding companies that they directly regulate through the various committees.
I’m just a schlub trying to save enough money for my retirement. 401k, IRA, Roth IRA.
From businessinsider.com
“Retail traders are mirroring investments by Nancy Pelosi’s husband, whose stock picks have been strong performers over the last 2 years.”
Queen Nancy tells us that this is a free market, and all of you serfs should shut up and row.
“”No elected official should be allowed to trade on information that is not available to the public.””
Neither should they be able to receive campaign contributions (AKA bribes) from companies they oversee, but I don’t see any way around it.
The only way for this to stick and to have any effect is to ban trading outright by members of Congress, their staffs, officials in the Executive Department above a certain level or who have access to policy initiatives that might move the markets (including the President), and all of their “immediate families,” which in the banking industry, for example, includes spouses and dependents. It can be monitored by requiring all brokerage accounts to be disclosed to a compliance officer. In a bank, if you violate this more than once or twice, you can get fired; Congress can enforce it by censure of Members and the President can discharge Executive Department officials. I doubt Congress would make it a criminal matter, but it could have a civil penalty of the greater of 20% of the gross amount of the transaction or 120% of the profit (with a lower penalty, perhaps just 100% of the profit, if the trading can be shown to have been inadvertent). And there should be an exception for blind trusts.
And you just grew gov’t regulatory agencies by a minimum of 10%. Congrats – you gave them more power, not less.
Didn’t Pelousy and the Democrats have some problem with Trump not putting his holdings in a blind trust? I seem to recall that they weren’t pleased.
That was just more of their “Rules for thee, but not for me!” attitude.
If we were really a free market economy I’d be able to buy showerheads and toilets based on my wants and not the bullshit government mandates on conserving water. Which is really just another control lever.
I sure hope MaligNance moves to her new digs in Florida soon, and that the rising seas engulf her forever.
WHY A “BLIND TRUST?” THE Trustee can still be given the info to trade. Best bet, Mutual Funds only!.