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The New York Times reported that of 183 current senators and representatives who reported trades, more than half sat on committees that potentially allowed access to early information.
After almost two years of bipartisan negotiations on crafting a congressional stock trading ban, House Democratic leadership finally introduced a bill at the end of last month, and it just as quickly collapsed. The bill went beyond the parameters of prior efforts to include family members and top aides, while adding a potential loophole that would undermine the very purpose of transferring one’s portfolio into a blind trust.
Rep. Abigail Spanberger (D-VA), the architect of one of those previous bills, the TRUST in Congress Act, called House Speaker Nancy Pelosi’s move “a failure of House leadership” designed to “crash upon arrival” in the final days of the legislative session. Going further, she suggested that the House leadership’s moves all along were just about creating the illusion of caring about the issue without any real intent of passage.
If that was the strategy, it may come back to bite Democrats. At this point in the midterms, it’s harder to find a candidate who isn’t running on this issue than one who is. Even Spanberger’s opponent, Yesli Vega, told The Washington Post last month that if elected, she would vote in favor of a congressional stock trading ban.
Republicans on the campaign trail have seized the moment, using the canned bill as part of a final messaging strategy less than a month from Election Day. Christian Castelli, a former Green Beret and inspector general for the Army running in North Carolina’s Sixth Congressional District, started running ads criticizing Pelosi and his opponent, Rep. Kathy Manning (D-NC), as making “big money” by selling stocks before critical bills. “Must be why Nancy Pelosi cancelled the vote to ban stock trading,” Castelli wrote on his Facebook campaign page.
While according to several pollsters, the Castelli seat in North Carolina leans blue, other campaigns have adopted variations of this messaging too.
Frank Pallotta, running against the corporate-friendly co-chair of the Problem Solvers Caucus Rep. Josh Gottheimer (D-NJ), has used Facebook ads to call Gottheimer’s legacy one of illegal stock trading. Over a year after the TRUST in Congress Act’s introduction, Gottheimer signed on as a co-sponsor and announced that he would place his portfolio into a blind trust. In August, Business Insider reported that Gottheimer and his wife exchanged up to $15,000 of stock in November 2021, but did not report the exchange until August 2022, nor had he formally established a blind trust according to House records. The current STOCK Act requires members of Congress and their spouses to report stock or other financial trades within 45 days, or face a $200 fine for first-time violators.
On October 5, the National Republican Congressional Committee (NRCC) put out a statement calling Rhode Island treasurer Seth Magaziner, who’s running for Rhode Island’s Second Congressional District, a hypocrite for accepting the endorsements of Democrats who have violated the STOCK Act, Sen. Sheldon Whitehouse (D-RI) and Rep. Jim Langevin (D-RI). Republicans see the seat as a significant pickup opportunity, which polling backs.
NRCC press secretary Samantha Bullock also announced a new ad against Rep. Tom Malinowski (D-NJ) that reminds voters of Malinowski’s failure to report up to $3 million in stock trades during the pandemic. Malinowski earlier this year announced that he transferred his portfolio into a blind trust and also co-sponsored Spanberger’s bill.
Democrats failing to call for a vote on a passable congressional stock trading ban provided the opportunity for Republicans to elevate the issue to voters.
Yesterday, the NRCC dropped a new ad against Rep. Cindy Axne (D-IA) called “Secret Stocks,” detailing Axne’s history of violating the STOCK Act by failing to disclose up to $645,000 in stock trades in 2021, according to the Campaign Legal Center. The 2021 controversy led to Axne coming out in support of a congressional stock trading ban in February earlier this year, but with reservations about also banning things like 529 education savings plans that aren’t actively managed.
Polling from Moore Information Group published on September 30 showed Axne’s opponent, Zach Nunn, leading by two points. Among independent voters, Nunn leads Axne by 46 to 38 percent, a sizable jump from earlier polling in July that showed Axne leading 42 to 39 percent.
The Democratic lawmaker Rep. Elaine Luria (D-VA), who called the entire concept of a stock trading ban “bullshit” back in February, is facing attacks from her opponent, Virginia state Sen. Jen Kiggans. After Senate Democrats also announced they would shelve the bill until a later date, Kiggans described the move as “saving multi-millionaire and stock trading aficionado, [Elaine Luria] from having to take a vote on the Congressional Stock Trading Ban … Wonder how she would’ve voted?” The Kiggans campaign has attacked Luria on the issue since the summer. In July, Kiggans released a statement following the passage of the CHIPS and Science Act calling on Luria to sell off her investments in Nvidia, which comprise up to $25 million of Luria’s portfolio.
Luria has not backed down from her position, she is not a co-sponsor for the TRUST in Congress Act, and she dismissed criticisms of her Nvidia portfolio as “a hollow political attack” because they are “designers of chips, not manufacturers of chips, and are not qualified for the subsidies [in the CHIPS and Science Act].” This is true, and the industry has complained that the CHIPS Act mainly benefits manufacturers like Intel at the expense of chip designers. Nvidia’s stock has plummeted in recent days over the White House’s announcement of a new set of restrictions on Chinese access to advanced chipmaking technologies.
According to FiveThirtyEight, as of now, the Luria/Kiggans race is neck and neck.
Democrats failing to call for a vote on a passable congressional stock trading ban provided the opportunity for Republicans to elevate the issue to voters in the final weeks leading up to Election Day, even as many in the GOP had no intentions of actually passing one this year. Among the 72 co-sponsors for the Spanberger bill, only 12 Republicans signed on. In January, Minority Leader Kevin McCarthy (R-CA) expressed interest in the issue only if Republicans gained control of Congress after the midterms. Members of the GOP in April said such an effort could curb “the rights and the freedoms” of lawmakers. And as the pressure increased in late July, McCarthy doubled down, insisting that if Republicans took control, only then would they look further.
Part of the issue’s potency is that even if insider trading cannot be legally proven, the perception that lawmakers have access to information before the public and Wall Street is enough to summon the worst caricatures of a corrupt politician. In September, The New York Times reported that out of the 183 current senators and representatives who reported stock trades and other financial maneuverings, more than half of them sat on committees that potentially allowed access to early information about companies whose stocks they reported buying or selling. Among those with potential conflicts of interest were 29 Republicans in the House and 15 in the Senate.
Several Republican congressional offices did not respond to the Prospect’s request for comment.
In 2006, Reps. Louise Slaughter (D-NY) and Brian Baird (D-WA) drafted the first version of the STOCK Act following allegations of insider trading from the year before against a top House aide, and another against the then–Senate Majority Leader, Bill Frist. It would take until after President Obama’s re-election for the bill to be passed. And for the issue to regain momentum, it took the most nakedly corrupt examples of trading practices by former Georgia Sens. David Perdue and Kelly Loeffler, who dumped stocks before the economy crashed at the onset of the COVID-19 pandemic.
The issue is far from leaving the public’s consciousness. As an example of the absurdity of it, there are now two ETFs, NANC and KRUZ (referencing Pelosi and Sen. Ted Cruz), that follow how members of Congress are trading. And at a Sunday rally in Arizona for gubernatorial candidate Kari Lake and Senate candidate Blake Masters, former President Trump told the crowd, “Look at [Pelosi’s] stocks. I mean, she did better than Warren Buffett.” He continued: “And now she doesn’t want to change it, where they’re allowed to get inside information.”
