Should Congress be allowed to play the stock market? Campaign to ban lawmakers from trading heats up as it’s revealed they made $1 BILLION of deals last year and raked in huge returns of up to 239%
A campaign to ban members of Congress from stock trading is gaining momentum after research shows politicians made trades worth more than $1 billion last year β and many of them far outperformed the market.
Lawmakers are accused of “gangster” tactics by critics who have demanded legislation to ban members of Congress and their immediate family members from owning or trading stocks.
The proposed law β known as the ETHICS Act β already has the support of several members, but needs more support before it can be passed.
The campaign to end trading by top US politicians has gained momentum after revelations showed several politicians had huge success in the stock market last year.
Nancy Pelosi, former Speaker of the House of Representatives, is one of the most prolific traders. Since 2019, she has completed a total of about $100 million in transactions. According to one analysis, its return last year was about 65 percent, easily outperforming the broader market.
Nancy Pelosi, pictured in the Vanity Fair Oscar Party 2024, is one of the most prolific traders in Congress, posting profits of more than 60 percent last year, according to one analysis.
A report on trades by members of Congress shows that several of them have far outperformed the stock market in recent years
Democratic Rep. Brian Higgins of New York was picked as one of the top-performing members of Congress after earning a 238 percent return on his investments, putting him first in terms of percentage gain. Higgins’ profits came from several trades in 2020.
Mark Green, the Republican chairman of the Homeland Security Committee, appeared to have made a gain of 122.2 percent.
Other studies have found that stocks chosen by members of Congress have risen about 273 percent since April 2020.
None of the lawmakers are accused of illegal activities.
Unusual Whales, a trading community that produced a report on the trading activities of members of Congress in 2023, is now partnering with RepresentUs, an anti-corruption organization, to launch a new campaign against the practice.
They believe that politicians should be banned from owning or trading shares to prevent them from working with insider information or making decisions based on their own financial interests.
RepresentUs CEO Joshua Graham Lynn said: βIt is outrageous that members of Congress are playing the stock market while millions of Americans are struggling to make ends meet. I would call it gangster behavior, but that would imply it is illegal and unfortunately it is not.
βThe vast majority of Americans want this to stop. So let’s make sure it stops.’
Polls show 70 percent of Americans support a ban on lawmakers’ trade.
An overwhelming number of politicians from both parties have also indicated that they support a ban, but have not yet passed strict legislation to end the practice.
Democratic Rep. Brian Higgins of New York was picked as one of Congress’s top performers after achieving a 238 percent return on his investments
Mark Green, the Republican chairman of the Homeland Security Committee, was found to have made a gain of 122.2 percent, according to an analysis
Pelosi is among those who have said she supports a ban. In 2020, she supported the idea, but said it should “be government-wide” β which was seen by some critics as simply a flop.
Currently, lawmakers are bound by the STOCK Act of 2012, an acronym for Stop Trading on Congressional Knowledge.
The law makes it illegal for politicians and their staff to use private information from their official work for personal gain. Lawmakers must also make their transactions public within 45 days.
But the standard penalty for breaking the law is a fine of just $200 β an amount that pales in comparison to some politicians’ profits. And dozens of lawmakers from both sides have repeatedly broken the law’s rules.
An investigation by Business Insider in January 2023 found that 78 members of Congress had failed to report their transactions on time. Among them were Senator Tommy Tuberville, the Alabama Republican, and Representative Jamie Raskin, the Maryland Democrat.
The ETHICS Act β Ending Trading and Holdings in Congressional Stocks β would ban politicians and their immediate family members from owning and trading stocks.
Sen. Jeff Merkley of Oregon, the bill’s lead sponsor, has called Congress’ stock trading “highly corrupt.”
βWe were elected to serve the public, not our wallets. And no member should vote on bills influenced by the nature of their assets,β Merkley said.
In total, members of Congress conducted about 11,000 transactions in 2023 β down from a high of 17,000 during Covid-year 2020 and 14,000 in 2022. The transactions had a volume of nearly $1 billion.
A tool that copies investments made by members of Congress and their families rose 20 percent in the 12 months through January. The green shows that the Congress tracker has significantly outperformed the S&P500 since April 2020, represented by the gray line.
A separate tool focused solely on Nancy Pelosi’s portfolio shows her investments rose about 50 percent in the year to January. Pelosi’s investments are illustrated by the blue line, while the gray line shows the performance of the S&P500 over the same period
Democrats defeated Republicans last year in performance and transaction volume.
Overall, 33 percent of traders in Congress beat the S&P500, which tracks the value of America’s largest companies. About a fifth of members traded, down about 33 percent from 2020 to 2022.
The Democrats in the House of Representatives submitted approximately 7,000 transactions, the Republicans in the House of Representatives 3,000.
The members with the largest number of transactions did not necessarily perform the best.
Rep. Rho Khanna, D-California, reported 4,253 transactions, but underperformed the S&P 500, which returned 25 percent versus its 13 percent return.
Rep. Michael McCaul, R-Texas, chairman of the House Foreign Affairs Committee, had 1,826 transactions but only an 11 percent return.
Members of the House Oversight and Accountability Committee bought health care stocks in 435 separate transactions and financial services stocks in 392.
Members of the Armed Services Committee executed 392 trades in healthcare stocks and 277 in financial services stocks.