Stock trading ban becomes hot-button campaign issue

Stock trading for members of Congress is becoming a flashpoint on the campaign trail this cycle as calls for a ban on the practice for lawmakers grow. 

The issue is a rarity in that it has cut across party lines, with Republicans and Democrats both seizing on the issue ahead of the midterms.

North Carolina Democratic Senate candidate Cheri Beasley rolled out an ad this week calling for members of Congress to be banned from participating in the practice, while Republicans have hit vulnerable Democrats like Rep. Elaine Luria (D-Va.) over their stances against a ban. 

“It’s so overwhelmingly popular because the public understands it and they’re outraged,” said Liz Hempowicz, director of public policy at the Project on Government Oversight. 

The prospect of banning members of Congress from trading stocks is overwhelmingly popular with the majority of Americans, according to various polls. One survey from the left-leaning firm Data for Progress found that 70 percent of respondents said lawmakers should not be able to buy or sell individual stocks while in office, while 68 percent said spouses should be included in the ban. A separate Morning Consult-Politico poll released in January found that 63 percent of all voters said members of Congress should be banned from the practice. Additionally, the poll found that 57 percent of all voters support banning lawmakers’ families from taking part in it. 

The issue has come up on the campaign trail before.

Sen. Richard Burr (R-N.C.), Sen. James Inhofe (R-Okla.), Sen. Dianne Feinstein (D-Calif.) and former Sen. Kelly Loeffler (R-Ga.) came under fire in 2020 when it was revealed they sold stocks shortly after a January briefing in the Senate on the coronavirus outbreak. Loeffler ended up losing her reelection bid later that year.

Campaigns argue that calling for a ban fits into a broader narrative of their candidates fighting to take on special interests and seek to be beholden solely to voters. 

“North Carolinians are sick and tired of politicians like Congressman Ted Budd [R-N.C.] rewriting the rules to help themselves and their corporate donors, and Cheri has shown throughout this campaign that she is the only candidate in this race who will stand up to both parties and corporate special interests to do what's right for North Carolina, including through her commitment to banning stock trading by members of Congress and banning corporate PAC money,” Dory MacMillan, a spokesperson for Beasley’s campaign, said in a statement to The Hill. 

Jonathan Felts, a senior adviser for Budd, hit back, saying Beasley “is talking about things no voter is talking about.” 

“North Carolina voters are talking about inflation and how, thanks to Biden policies supported by Beasley, they are having to choose between groceries or back to school supplies for their kids,” he said. 

There is no evidence that Budd has participated in insider trading. 

Other strategists point to how the strategy of hitting candidates who are opposed to the ban could ultimately play well in the midterms given record high inflation. 

“People dislike politicians who game the system for their own benefit, especially when they themselves are struggling,” said Republican strategist Matt Gorman. “So in this atmosphere, it could be a very potent message.” 

Luria, who is facing a tough reelection bid in Virginia’s 2nd Congressional District, has been one of the most outspoken critics of the prospect of a ban, calling the concept “bullshit” during an interview with Punchbowl News in February. Additionally, Punchbowl reported that the congresswoman brought up the issue during a recent meeting with other vulnerable Democrats. 

"Because I think that, why would you assume that members of Congress are going to be inherently bad or corrupt? We already have the STOCK Act that requires people to report stock trades,” Luria told the outlet. 

The issue has been a wedge between Democrats like Luria and other Democrats like Rep. Abigail Spanbereger (D-Va.), who is in favor of a ban. Meanwhile, it has aligned Luria with Republicans like Alabama Sen. Tommy Tuberville (R-Ala.). Spanberger has worked with Texas Republican Rep. Chip Roy (R-Texas) on the issue in the past, introducing legislation in 2020 to ban lawmakers from trading individual stocks. 

Still, Republicans are using the tactic to go on the offensive against candidates like Luria going into November. 

“These lawmakers are using their offices to make millions while everyday Americans are suffering from inflation and their cost of living is going up,” said one GOP strategist. 

A Business Insider investigation that rated lawmakers on their financial conflicts and transparency found that dozens of lawmakers and 182 senior congressional staffers are violating the STOCK Act [the Stop Trading on Congressional Knowledge Act], which prohibits members of Congress and employees from using private information gained from their personal positions for personal benefit. Additionally, the investigation rated 13 lawmakers, eight Republicans and five Democrats as “danger” when it came to failing to disclose financial trades. 

The same investigation labeled Luria with a “solid” rating, referencing financial compliance. 

“Any member that is pushing back saying these are draconian or unnecessary is missing the forest through the trees,” Hempowicz said. “It’s not about individual instances of corruption, it’s that the American people deserve to know that there are strong enough rules in place that they do not need to worry about their members of Congress trading stock on inside information.” 

Speaker Nancy Pelosi (D-Calif.) has been in the headlines recently for investments made by her husband, venture capitalist Paul Pelosi. The Speaker herself does not trade stocks.

Late last month, Pelosi signed a periodic transaction report revealing that her husband had sold up to $5 million worth of stocks of the software company Nvidia. The document showed that the transaction incurred a loss of $341,365. A separate periodic transaction report signed by the Speaker on July 14 revealed that her husband exercised 200 call options of Nvidia that month.

The document reflecting the sale of stock came one day before the Senate passed a chips and science bill, which the House cleared the next day.

However, when asked about the decision to sell the holdings around the time of the House vote, the Speaker’s spokesperson Drew Hammill told The Hill in a statement that Paul Pelosi purchased options to buy stock of Nvidia over a year ago and ultimately exercised them on July 17.

“As always, he does not discuss these matters with the Speaker until trades have been made and required disclosures must be prepared and filed. Mr. Pelosi decided to sell the shares at a loss rather than allow the misinformation in the press regarding this trade to continue,” Hammill said. 

The Speaker previously voiced opposition to banning members of Congress from trading stocks. But she has since come on board with the plan. Punchbowl News reported last week that House Democrats are set to roll out a plan this month that would prohibit lawmakers, their spouses and senior staff from trading stocks and either divest fully or put the investments in a qualified blind trust. 

“Members are so concerned about their own individual situation,” Hempowicz said. “So the process of coming up with consensus legislation right now or legislation that people are willing to put to the floor because it’s so wildly popular with the public has been excruciatingly slow because every member wants to say ‘how does this impact my personal situation?’”