Full Committee Hearing: “Taking Stock of the STOCK Act.”

Committee on House Administration

2025-11-19

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Source: Congress.gov

Summary

The Committee on House Administration convened a hearing titled "Taking Stock of the Stock Act" to discuss congressional stock trading and potential reforms to ensure lawmakers do not profit from insider information obtained during their service on Capitol Hill [ 00:06:07 ] . The primary goal is to restore public trust in government by addressing concerns about self-enrichment by elected officials [ 00:07:21 ] .

Themes

  • Critiques and Limitations of the Current Stock Act The Stop Trading on Congressional Knowledge (Stock) Act, passed in 2012, explicitly prohibits the use of nonpublic information for financial benefit and requires disclosure of trades over $1,000 within 45 days [ 00:07:30 ] . However, many Americans criticize it for insufficient transparency, as exact profit or loss cannot be determined from current disclosures [ 00:07:43 ]

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    . Despite allegations of improper conduct, no member of Congress has ever been prosecuted under the Act, largely due to the high burden of proof for insider trading . The current penalty for violations, a nominal $200, is considered an inadequate deterrent . This framework is seen as "Band-Aids to a gaping, festering wound" that has eroded public trust in institutions [ 00:11:01 ]

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    .

  • Proposed Reforms to Enhance Transparency and Restrict Trading Several reforms have been proposed, including updating reporting and enforcement, requiring advanced disclosures, and outright banning individual stock ownership [ 00:08:07 ]

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    . Advanced disclosure, where trades are announced ahead of time, is seen as a way to remove financial incentives and increase transparency, potentially flagging questionable transactions before they occur [ 00:30:20 ]

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    . Another proposal suggests changing fines to be either $1,000 or the amount of profit made or loss avoided, whichever is greater, to provide a more effective deterrent [ 01:17:22 ]

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    . The idea of "preclearance" for trades, similar to practices in the corporate world, was also discussed as a way to ensure compliance and prevent trading on non-public information .

  • Scope of Restrictions: Individuals and Assets Discussions covered who should be subject to new rules, including members of Congress, their spouses, dependent children, and potentially other family members [ 00:08:54 ]

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    . There's strong support for extending a ban on individual stock trading to co-equal branches of government, including the executive and judicial branches, to address corruption and self-dealing across Washington [ 00:10:47 ]

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    . The types of assets to be restricted are also debated, with a focus on individual securities, security futures, and commodities, while excluding widely held investments like diversified mutual funds and U.S. Treasury bills . Cryptocurrencies and other digital assets are increasingly being included in proposed prohibitions .

  • Challenges in Implementing Divestment and Bans Implementing outright bans or forced divestment presents several challenges, particularly concerning tax implications . Requiring divestment could lead to significant capital gains taxes for long-held assets, potentially burdening individuals who serve in Congress [ 00:40:03 ]

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    . A suggested solution is to allow for a tax-deferred rollover of gains into new, compliant securities . Additionally, handling illiquid assets like venture capital, private equity, or small family businesses (e.g., a community swimming pool or farm) poses difficulties, as quick divestment might be impractical or damaging [ 00:29:07 ]

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    . Different timeframes for divestment based on asset type, or exemptions for small businesses, are considered to accommodate these unique situations .

Tone of the Meeting

The tone of the meeting was largely serious and bipartisan, reflecting a shared concern for public trust and accountability [ 00:06:34 ] . Participants expressed urgency for reform, acknowledging that the current system is inadequate and has led to a perception of impropriety [ 00:11:14 ]

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. While differing on specific solutions and the scope of new rules, there was a consensus on the need to prevent members from profiting from insider information and to restore confidence in government [ 00:09:50 ]

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Participants

Transcript

The Committee on House Administration will come to order.  The title of today's hearing is Taking Stock of the Stock Act.  I note that a quorum is present.  Without objection, the chair may declare recess at any time.  Also, without objection, the hearing record will remain open for five legislative days, so members may submit any materials they wish to be included therein.  Thank you, Ranking Member Morelle, members of the Committee, and our witnesses for participating in today's hearing.   Today, the Committee on House Administration continues our oversight over the legislative branch.  Let me be clear from the outset.  Trading stock on insider information is a serious crime and must be prosecuted to the fullest extent of the law.  As chairman of the Committee on House Administration, I believe it's critical that we ensure lawmakers, regardless of party, regardless of seniority, are not profiting from insider information they learn while working on Capitol Hill.   In recent years, social media accounts have generated significant media attention for aggregating the stock trades of members of Congress.  Understandably, it's fueled public concern that lawmakers may be using their positions of authority to personally benefit themselves.  While rules already govern how public officials trade stocks, stronger restrictions may be necessary to restore public trust and ensure officials are not profiting from their positions.   In today's hearing, we'll look at the issue of congressional stock trading at large, including current rules, and evaluate proposed reforms.  The current statute governing congressional stock trading, the Stop Trading on Congressional Knowledge, or the Stock Act, was passed over a decade ago in 2012 with bipartisan support.   Under the Stock Act, members of Congress, executive branch officials, and other federal employees are prohibited from using nonpublic information for their own financial benefit.  It also requires disclosure of stock trades exceeding $1,000 within 45 days of the transaction.   Many Americans have been critical of the Stock Act for not requiring sufficient transparency.
For example, the current financial disclosures and periodic transaction report requirements are not filed in exact amounts.  Because of this, you cannot determine a lawmaker's actual realized profit or loss on a specific trade.   Some potential reforms include updating the Stock Act reporting and enforcement requirements, requiring advanced disclosures, and outright banning of individual ownership of individual stocks.  I want to thank a number of our colleagues for proposing various reforms to address this issue.  Chip Roy, Seth Magaziner, Brian Fitzpatrick, Tim Burchett, Mark Alford, and Representative Annapolino Luna all come to mind.  They've introduced or co-sponsored pieces of legislation   to strengthen the Stock Act.  The bills propose different reforms, but the prevailing theme is significantly restricting or outright banning members, spouses,   or their dependent children from owning or trading stocks or other securities.  I believe we have an opportunity here to make meaningful reforms and restore the public's trust.  The American people should be confident that lawmakers are working for them, not seeking office to financially benefit themselves.  I want to thank our witnesses for being here today.   I think we have a great opportunity.  And again, I'm going to state my goal.  My goal is, I think, pretty simple, to ensure that no lawmaker is profiting off of insider information while serving in the United States Congress.  With that, I'll yield to the Ranking Member, Mr. Morelle, for his opening statement.
Thank you, Mr. Chairman, my good friend, for calling this important hearing, and thank you to our witnesses for appearing before us today.  Let me say at the outset I unequivocally support a ban on members of Congress trading individual stocks, and that ban should extend   to the co-equal branches of government as well.  The oath we take as members swears fidelity to the Constitution and the rule of law over personal gain or financial benefit.  The founding fathers recognized the danger of self-enrichment by those in power.  Sick of the unchecked corruption that was a feature of the monarchies of the time, James Madison warned against the bias in judgment that can cause the pursuit of personal gain to supersede that of the common good.   In this moment, confidence in our government is abysmally low.  Fostering public trust in our institutions is the absolute bedrock of the American experiment.  It is what gives our government legitimacy.   But that trust must be earned and kept by holding ourselves to the highest standard of conduct possible.  Even the mere appearance of impropriety is unacceptable and cannot be tolerated.  For years, my dear friend and predecessor, Representative Louise Slaughter, worked tirelessly on the Stop Trading on Congressional Knowledge Act, referenced by my friend the Chair.   The Stock Act was signed into law 13 years ago, and though it enacted much-needed reforms to enhance disclosure requirements and explicitly prohibit insider trading by government officials, there is much, much more to do.  And my good friend Louise would be astonished at the corruption happening today.  Regrettable, those reforms are now just Band-Aids to a gaping, festering wound.  We must find a cure to this ailment.

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