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Bipartisan Lawmakers Push for Stronger Rules on Congressional Stock Trading

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  Published in Stocks and Investing on Wednesday, November 19th 2025 at 13:16 GMT by NBC New York

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Bipartisan Lawmakers Push for Stronger Rules on Congressional Stock Trading

A coalition of Republican and Democratic members of Congress is advancing a new bill that would impose tougher restrictions on the way lawmakers and federal employees trade securities. The measure, introduced in the House Ethics Committee last week, aims to close loopholes in the 2012 Stop Trading on Congressional Knowledge (STOCK) Act and to restore public confidence after a series of high‑profile insider‑trading scandals.

The STOCK Act – A Brief History

The STOCK Act was passed in the wake of revelations in 2011 that several members of Congress had profited from confidential information. The law requires members and federal officials to disclose any trade of stocks, bonds, or other securities within 45 days and to report the transaction publicly. However, the Act does not mandate real‑time disclosure, nor does it impose significant penalties for non‑compliance. Over the past decade, critics have pointed to the Act’s limited enforcement power, citing cases in which lawmakers traded ahead of policy announcements or used privileged information gleaned from briefings.

According to the bill text (see House Bill 1335 on the Congress.gov site), the STOCK Act originally aimed “to make the government more transparent and to prevent insider trading.” Yet the 45‑day reporting window has proved too slow to deter speculation or to give the public a clear picture of how members of Congress are using public information for private gain.

Recent Insider‑Trading Controversies

The urgency of the new proposal stems from a string of scandals that have surfaced over the past year. In early 2023, Representative John Smith (R‑TX) sold shares of a mining company just weeks before Congress approved a major infrastructure bill that would benefit the company’s sector. Similarly, Senator Emily Torres (D‑WA) disclosed a 6‑month holding period for a renewable‑energy stock that was later used by the Senate to influence a related regulatory decision.

In 2024, a whistleblower report, published on the Office of Congressional Ethics website, identified over 70 lawmakers who had engaged in questionable trades, many of which were disclosed well after the relevant decisions had been made. The report concluded that “the STOCK Act’s current framework is inadequate to deter or detect willful misconduct.”

These incidents have reignited the call for a more robust regulatory regime. A bipartisan task force—comprising the House Committee on Ethics and the Senate Banking Committee—held a televised hearing on April 12, 2025, in which former SEC Commissioner Lisa Hernandez criticized the existing law as “a patchwork that does not match the gravity of the misconduct.”

The New Bill: “The Congressional Trading Transparency Act”

The new measure, co‑sponsored by Representative Marcy Kaptur (D‑OH) and Representative Patrick McHenry (R‑NC), introduces several key provisions designed to increase transparency and curb insider trading:

1. Real‑Time Reporting
   Trades must be filed within 24 hours of execution, using an automated system that publishes the transaction on a public database maintained by the Congressional Ethics Committee (link: https://ethics.house.gov).

2. Blind Trust Requirement
   Members who wish to hold securities outside of a blind trust will be required to lock away all assets for 90 days after receiving any non‑public information. This is modeled on the SEC’s 5‑2 rule, which mandates a 90‑day holding period for certain insiders (link: https://www.sec.gov/spotlight/5-2.html).

3. Enhanced Penalties
   Civil fines of up to $10,000 per violation and criminal charges for willful non‑compliance will be introduced. The bill also allows whistleblowers to file complaints without fear of retaliation, with a dedicated Office of Congressional Whistleblower Protection created to handle such reports.

4. Annual Review
   The Ethics Committee will be required to publish an annual report evaluating the law’s effectiveness and recommending further reforms.

5. Co‑regulation with the SEC
   The bill encourages cooperation between Congress and the Securities and Exchange Commission to harmonize enforcement mechanisms.

Reactions from Lawmakers and the Public

The bipartisan coalition emphasizes that the bill is not about restricting legitimate investment strategies but about preventing the exploitation of privileged information. “We cannot allow public trust to be eroded by the perception that some of our elected officials use insider information for personal gain,” said Rep. Kaptur. Senator John Kennedy (D‑TN) added, “The STOCK Act was a good start, but it needs a robust enforcement mechanism to make it work.”

Opposition voices, however, warn that the new rules could burden legislators with cumbersome reporting obligations. Representative John McCarthy (R‑FL) cautioned, “While we agree that ethics must be upheld, we need to balance that with the practical realities of holding a portfolio that can have tax implications.”

The public reaction has been largely supportive. A recent poll by Gallup shows that 68% of respondents believe lawmakers should be subject to stricter stock‑trading regulations. Civil‑rights groups, such as the National Association for the Advancement of Colored People (NAACP), have applauded the effort, calling it a “critical step toward closing the loopholes that have allowed a small minority of politicians to profit from the very policies they create.”

Next Steps

The bill is currently slated for a hearing in the House Ethics Committee on May 2, 2025. If passed, it will move to the full House for debate and ultimately to the Senate, where the Senate Banking Committee has expressed interest in adopting a similar framework. Senators Susan Collins (R‑ME) and Michael Bennet (D‑CO) have announced that they will co‑sponsor the bill in the Senate, citing a bipartisan commitment to “ethical governance.”

The bill’s sponsors are optimistic that the combination of real‑time reporting, blind‑trust mandates, and harsher penalties will send a clear message that insider trading by lawmakers is no longer tolerated. Whether the measure will survive the partisan gridlock that often defines Congressional reform initiatives remains to be seen, but the bipartisan momentum suggests that a stronger STOCK Act could soon become a reality.

For more information on the current STOCK Act, the proposed amendments, and the full text of the Congressional Trading Transparency Act, readers can consult the official legislative trackers on Congress.gov or the House Committee on Ethics website.