Legislation Would Have Banned Problematic Rand Stock Deal
Public opinion is on the side of banning members of Congress from owning individual stocks
The controversial stock trade which has some calling for Sen Rand Paul's resignation would have been prevented if Congress had already approved the Ban Conflicted Trading Act.
Paul failed to report his wife’s February 2020 stock purchases of Gilead, the company whose antiviral drug was the first to receive emergency use authorization as a potential Covid-19 treatment from the Food and Drug Administration in May 2020.
It's the timing of when she bought the stock —months before the drug was used as an antiviral treatment and before the American public understood the serious nature of the virus — that has brought scrutiny and criticism down on the junior senator from Kentucky.
Paul and his wife had not bought stock in an individual company in at least 10 years before Kelley Paul purchased shares of the drug company Gilead Sciences.
And, finally, Paul disclosed his wife's purchase on Wednesday, more than 16 months after the legal deadline for such disclosures by a member of Congress.
This is the latest example of members of Congress using confidential information to serve their own financial interests.
Last year, then-Sen Kelly Loeffler (R-Ga) was caught in a highly suspicious stock trade when she sold off $20 million in stock between a classified COVID-19 briefing on January 24, 2020 and when the market crashed in March -- all while misleading the public about the dangers of the novel coronavirus.
Sen Jeff Merkley (D-Ore) and Sens Raphael Warnock (D-Ga) and Sherrod Brown (D-Ohio) teamed up with a bipartisan group of House members — Reps Raja Krishnamoorthi (D-Ill), Alexandria Ocasio-Cortez (D-NY), Joe Neguse (D-Colo), Matt Gaetz (R-Fla), and Michael Cloud (R-Texas) earlier this year introduce the Ban Conflicted Trading Act—legislation that is supported by the majority of Democratic, independent, and Republican voters and would prohibit members of Congress and senior congressional staff from abusing their positions for personal financial gain, proponents of the bill said.
Recent polling shows that 67 percent of Americans support banning members of Congress from holding individual stocks.
“We need to end the era in which members of congress buy and sell individual stocks for personal gain. This practice is deeply corrupt,” said Merkley. “First, it biases the viewpoint of members when working on legislation related to a stock they own. Second, members trade on information they hear that the general public doesn’t. And that’s just wrong. Let’s bring some integrity to Congress and end the trading in individual stocks.”
Bill would mandate steps to prevent conflicts of interest
The Ban Conflicted Trading Act would bar members of Congress and senior congressional staff—who often have advance notice of investigations, hearings, and legislation that can impact stock prices, or can move markets by hinting at policy changes—from buying or selling individual stocks and other investments, and from serving on any corporate boards, while in office.
New members would be allowed to sell individual holdings within six months of being elected, and sitting members of Congress would be allowed to sell individual holdings within six months after enactment of the bill. Alternatively, members of Congress could choose to hold existing investments while in office—with no option for trading until they leave office—or transfer them to a blind trust. Members of Congress would still be allowed to hold widely-held investments, such as diversified mutual funds and exchange-traded funds.
“There is an unavoidable potential conflict of interest when Members of Congress and their top staffers trade in stocks while making decisions affecting the value of those stocks,” said Krishnamoorthi. “Our legislation will eliminate even the possibility of these conflicts of interest and ensure public servants put their constituents first by banning members and their senior aides from trading individual stocks.”
Full text of the legislation is available here.
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