- Congress will introduce a proposal to ban individual stock trading among its members and their spouses, according to a report from Punchbowl News.
- Members of Congress, their spouses, and senior staff will be able to own mutual funds or set up a qualified blind trust.
- Nancy Pelosi has become a lightning rod on the issue due to the reported stock trades of her husband.
House Democrats will introduce a proposal to ban individual stock trading for members of Congress, their spouses, and their senior staff, according to a report from Punchbowl News.
The impacted parties will have two options: either own mutual funds or set up a qualified blind trust, which typically relinquishes control of the account to a financial advisor that can make investment decisions for the client without telling them, thus avoiding a potential conflict of interest.
The proposal is expected to be rolled out in August, with legislation to be introduced in September. "We're almost ready to move forward on this," House Administration Committee Chair Zoe Lofgren told Punchbowl News on Wednesday.
The passage of the proposal would help quell growing concerns that members of Congress are unfairly trading in individual stocks while they are also making legislative decisions that could have an outsized impact on the companies that they are invested in.
For example, earlier this month stock trading disclosures made by Nancy Pelosi showed that her husband, investment professional Paul Pelosi, purchased shares of Nvidia right before Congress was considering the passage of the CHIPS act, a bill that offers $280 billion in funding to incentivize the semiconductor industry to build in America.
While Pelosi ultimately sold the Nvidia stock for a loss, the appearance of a potential conflict of interest has led many to criticize the ongoing trading of stocks by members of Congress. Last week, Nancy Pelosi said she has never shared information with her husband that he then traded on.
Not helping Congress' reputation when it comes to trading individual stocks is the fact that former members of Congress have been busted for illegal insider trading.
But even if the bill passes the House, there's no telling if it will be able to pass the Senate with the required 60 votes, though both Republicans and Democrats have offered support in the past for curbing stock trading by members of Congress.
Potentially hampering this bill is the fact that is bans the spouses of Congress members, which could represent a challenge for partners of Congress members that work in the financial services industry.