Trust is the foundation of representative government.
Under our constitutional system, citizen leaders are charged with putting the interests of their constituents over their own. Failing to do so erodes confidence in our institutions, and, ultimately, our system of government.
By current measures, Congress is not living up to this standard. According to recent polling, only 17% of Americans say they trust the federal government. As faith in government has eroded for decades, the task of restoring it is similarly a long-term project.
One way to begin repairing this breach is to ensure that public servants cannot use their positions to enrich themselves and their families. That is why I support a ban on stock trading by members of Congress.
The Wall Street crash of 1929, following a period in which some investors inflated and sold off stocks, and the ensuing Great Depression, during which many families lost their life savings, led many Americans to believe that the market was tilted in favor of insiders.In 1934, Congress attempted to restore confidence among citizens and increase transparency in the stock market by passing the Securities Exchange Act. It regulated the market, required publicly traded companies to issue regular reports and required brokers to register with the newly established Securities and Exchange Commission.
However, the law did not address stock trading by members of Congress — an omission that continues to raise concerns today.As lawmakers, we write and pass bills that significantly impact the market. We sit on committees that oversee entire sectors of America’s economy. And we have access to briefings and updates that provide nonpublic market information.
There is little to prohibit members of Congress from using this privileged information to guide their selection of stocks. In the last two decades, members have made trades conspicuously timed around market-moving events — events shaped by information they had access to or legislation they helped advance.
This creates a direct conflict between public duty and personal financial interest. It is also a troubling double standard: Insider trading is a federal crime for all Americans, but when it comes to members of Congress trading on information gained through public service, enforcement is rare and often difficult to police. No wonder many Americans are convinced that the market is rigged for a privileged set of citizens who can manipulate it for their gain.
In 2012, Congress made some headway in addressing this unfairness by passing the Stop Trading on Congressional Knowledge (STOCK) Act. The law mandates that lawmakers report stock trades over $1,000 within 30 days of the transaction. The enforcement mechanism, however, is virtually toothless: an initial fine of $200.
Even beyond weak enforcement, the underlying problem remains. Today, roughly 200 members of Congress own shares in publicly traded companies, including many who sit on committees that craft policy for and conduct oversight on the very industries in which they invest.
In an era of deep partisanship, most Americans, no matter their political beliefs or party, agree this is a problem. According to a survey conducted by the University of Maryland’s School of Public Policy, 86% of the population supports a prohibition on congressional stock trading.
This sentiment is echoed across Indiana, where I regularly hear from Hoosiers who are rightly troubled about those serving in Congress profiting from their positions. I share their concern and have publicly supported two bills that would put a stop to insider trading in Congress.
The Stop Insider Trading Act, led by Sen. Ashley Moody, R-Florida, would prevent members of Congress, their spouses, and their dependent children from trading individual stocks and strengthen disclosure and enforcement requirements. And, unlike current law, this bill would impose meaningful financial penalties for violations: lawmakers who fail to comply with the law’s mandates would be fined the greater of $2,000 or 10 percent of the investment value, plus the forfeiture of any net gain realized from the sale.
The Restore Trust in Congress Act, led by Sen. Pete Ricketts, R-Nebraska, would prohibit members of Congress from trading individual stocks and establish guidelines for members to divest existing holdings within a defined period. It also would empower congressional ethics offices to enforce compliance through meaningful penalties.
Americans across the political spectrum agree that their leaders should not leverage positions of public trust for personal enrichment. Passing these bills will ensure this practice finally comes to an end in Congress and help restore trust in those who serve.
Todd Young, a Republican, represents Indiana in the U.S. Senate.
This article originally appeared on Indianapolis Star: I’m a U.S. senator. Ban Congress from trading stocks. | Opinion
Reporting by Todd Young, Opinion Contributor / Indianapolis Star
USA TODAY Network via Reuters Connect
