S-3649-119
Read twice and referred to the Committee on Homeland Security and Governmental Affairs.
Sponsored by Ashley Moody (R-FL)
What it does
This bill would prohibit Members of Congress, their spouses, and their dependent children from owning or trading individual stocks, commodities, futures, derivatives, and other specified financial instruments. Current members would have 180 days from enactment to divest; new members would have 90 days. Exemptions include diversified mutual funds and index funds, U.S. Treasury and municipal bonds, small business interests, personal-residence real estate LLCs, and Alaska Native Claims Settlement Act stock. Violations would result in a 10% fee on the value of the investment plus disgorgement of any profits, paid to the U.S. Treasury, and penalties could not be paid using official office funds or campaign contributions.
Who benefits
The general public, who would gain greater assurance that legislative decisions are not influenced by members' personal financial positions. Investors and market participants broadly, who would benefit from reduced information asymmetry if lawmakers cannot trade on non-public legislative knowledge. Challengers in congressional elections, who could use compliance as a campaign issue. Diversified fund managers (e.g., index fund and ETF providers), who would likely receive divested assets. Ethics watchdog organizations, whose oversight role would be reinforced.
Who is hurt
Members of Congress and their spouses and dependent children who currently hold individual stocks, futures, or other covered investments and would be required to sell them, potentially at an unfavorable time. Financial advisors and brokers who manage individual portfolios for congressional families would lose that business. Members from financially complex households — those with inherited portfolios, trust arrangements, or spouses in financial professions — would face significant compliance burdens. Smaller or less liquid investment positions could be difficult to divest within the deadlines, creating hardship even with extension provisions.
Supporters argue
Supporters argue that Members of Congress routinely vote on legislation — including industry-specific regulations, tax policy, and government contracts — that directly affects the value of stocks they personally hold, creating an inherent conflict of interest. They point to academic studies and news investigations (including a 2021 Unusual Whales analysis) showing that congressional stock trades have historically outperformed the market at statistically significant rates, suggesting possible use of non-public information. They contend that the existing STOCK Act (2012) has proven insufficient because it requires only disclosure, not divestiture, and that a full ownership ban is the only structural remedy that eliminates the conflict rather than merely making it visible.
Opponents argue
Opponents argue that a blanket ban on stock ownership imposes a significant financial penalty on public service, potentially deterring qualified candidates — particularly those with financial expertise — from seeking or remaining in office. They contend that the bill's broad reach to spouses and dependents raises serious due process concerns, as family members who are not elected officials and have no access to legislative information would be stripped of ordinary property rights. Critics also argue that the existing STOCK Act already addresses insider trading by members, and that enforcement of existing law, rather than a new ownership prohibition, is the appropriate remedy for documented abuses.