WASHINGTON—A coalition of House lawmakers from various political backgrounds has reached an agreement on a proposal aimed at prohibiting members of Congress from trading individual stocks. Advocates claim this represents the first genuine opportunity to curb the practice in over a decade.
The bipartisan legislation, which is scheduled to be revealed next week, allows lawmakers and their family members a 180-day window from the date of enactment to divest from individual stocks they possess, including those in blind trusts, as per a document reviewed by The Wall Street Journal. Newly elected lawmakers would have 90 days following their swearing-in to liquidate their stock holdings, according to the proposal.
Lawmakers who fail to comply would incur fines amounting to 10% of the investment's value and would be required to forfeit any profits gained, as outlined in the 10-page proposal. The legislation includes several exceptions, such as stocks awarded to spouses and dependent children as part of their employment compensation, according to the bill's text.
The proposal was brokered by Rep. Seth Magaziner (D., R.I.). The discussions involved conservative Reps. Chip Roy (R., Texas) and Tim Burchett (R., Tenn.), alongside progressives like Reps. Alexandria Ocasio-Cortez (D., N.Y.) and Pramila Jayapal (D., Wash.).
In recent months, there has been increasing momentum to restrict stock trading by members of Congress and their families. Fluctuations in the stock market related to tariffs have highlighted the trading activities of lawmakers. Supporters argue that implementing new restrictions could help rebuild trust in Congress.
Speaker Mike Johnson (R., La.) expressed his support for a trading ban earlier this year, yet he has not endorsed any specific proposal. Treasury Secretary Scott Bessent recently indicated his readiness to advocate for a ban on individual stock trading. He remarked, “People shouldn’t come to Washington to get rich. It undermines trust in the system.”
President Trump has stated that he is “conceptually” open to imposing further restrictions.
In 2012, lawmakers enacted the Stock Act, which required increased disclosures and explicitly prohibited trading based on nonpublic information. However, they have faced challenges in implementing a complete ban on trading, despite widespread support for such an initiative among both Congress and the electorate.
Critics of new stock-trading regulations have highlighted that insider trading is already prohibited. Officials from the Securities and Exchange Commission and the Justice Department are able to investigate any suspicious trading activities. Others argue that imposing stricter requirements on lawmakers, along with the taxes and costs associated with liquidating individual stocks, creates an undue burden on them.
According to an analysis of financial-disclosure filings, only about a third of House lawmakers and just under half of senators traded individual stocks or held them as assets while in office last year. It is more typical for lawmakers to invest in traditional mutual funds, which spread investments across a variety of stocks. These funds would not be impacted by the proposed trading ban.
Congress members have mentioned that they frequently gain access to information, including insights from senior government officials during classified briefings, which could indicate trends in the stock market. Lawmakers also negotiate legislation that may influence publicly traded companies and collaborate with committee staff to summon top executives for oversight hearings.
"We definitely possess insider information in this context. There's no doubt about that," stated Rep. Brian Fitzpatrick (R., Pa.), a moderate participant in the discussions, during an interview earlier this year. "Therefore, to ignore that fact, I believe, is quite dishonest."
