Episode Details

It infuriates me when members of Congress — whether Republican or Democrat — squander the public’s trust. There’s so little of it left to squander. So when I find a conflict of interest by members of Congress for which there’s an easy remedy, I’m ready to shout it from the rooftops. And when I discover Congress won’t take action, I’m ready to scream.

Today I want to talk about a very big conflict, with a very easy remedy. And I’d like your help getting the word out and putting pressure on Congress to adopt it.

First, some background. Unless you have special insider information about what’s going to happen to the economy or to certain companies — information that very few other investors have — the buying and selling of individual shares of stock is a terrible investment strategy. This is why the vast majority of Americans who invest in the stock market invest in index funds that are tied to the performance of the stock market as a whole. 

So why do many members of Congress continue to invest in individual stocks? Could it possibly be that they learn useful things about what’s going to happen to the economy or individual companies before the rest of us do?

It certainly seems so.

In January 2020, a handful of senators — including Richard Burr, Dianne Feinstein, and Kelly Loeffler — made significant stock trades after receiving a classified briefing on COVID-19. This was January 2020, mind you — well before the public knew the full extent of the threat. 

Then in the early weeks of the pandemic, nearly 75 federal lawmakers bought stocks in COVID-19 vaccine makers Moderna, Johnson & Johnson, or Pfizer.

I could give you a lot more examples, but you get the point. Even if these were innocent investments that weren’t based on inside knowledge, they certainly smell like insider trades. At the least, they create the appearance of self-dealing. They undermine public trust.

A huge amount of information about the economy and individual companies courses through Congress every day. Much of it is not available to the public. Some of it indicates what’s likely to happen to a particular company’s share prices. There is no possible way to guard against the misuse of this information for personal profit. So why allow individual stock trades? There is simply no legitimate reason why members of Congress (or their families) should be trading individual shares of stock.

(By the way, “Insider” has just published the most complete and detailed public accounting to date of the stock transactions of individual members of Congress — one for the Senate and one for the House. It’s eye-opening. But disclosure alone won’t solve the conflict-of-interest problem because it’s impossible to tell whether the transactions were based on inside information.)

There’s an obvious solution: Bar members of Congress from trading individual stocks.

The proposed Ban Conflicted Trading Act does just this.