House to Vote on New Bill Aimed at Banning Members of Congress From Trading Stocks
The bill, titled 'Combating Financial Conflicts of Interest in Government Act', was designed to limit the conflict of interest that comes with politicians and their families trading stocks.
The introduction of the new stock trading bill, ‘Combating Financial Conflicts of Interest in Government Act,’ comes on the heels of the recent alleged insider trading controversy surrounding House Speaker Nancy Pelosi and her Venture Capitalist husband, Paul Pelosi. Paul had allegedly exercised call options in Nvidia (NASDAQ: NVDA) ahead of a Senate vote that would see the chipmaker secure a $52 billion subsidy.
According to the newly released draft legislation, if enacted into law, members of Congress, Supreme Court Justices, executive branch members, senior Government officials, and congressional staff will be banned from trading or owning individual stocks, commodities, futures, or cryptocurrencies.
Commenting on the bill, Rep. Zoe Lofgren (D-CA), chair of the Committee on House Administration, stated:
“I believe that a meaningful and effective plan to combat financial conflicts of interest could help restore the public’s faith and trust that our public servants act in the public interest.”
Critics of the new legislation have already spotted what some call a massive loophole that would allow members of Congress to skirt the rules with the use of a ‘blind trust,’ instead of selling any existing holdings.
Per Investopedia, a blind trust is:
“A trust established by the owner (or trustor) giving another party (the trustee) full control of the trust. The trustee controls the assets and investments while managing the assets and any income generated in the trust. Blind trusts are often established when individuals want to avoid conflicts of interest between their employment and investments.”
In a statement to Business Insider, Dylan Hedtler-Gaudette, government affairs manager at the Project on Government Oversight, highlighted the problem caused by the blind trust loophole, stating:
“The problem with this bill is it creates a completely separate process and doesn’t have any particular rules or requirements around it. You’d be able to create any kind of a trust you want to, put anything you want into it, and call it a blind trust, even though there wouldn’t actually be any way to prove that it is, in fact, a blind trust.”
House lawmakers are expected to vote on the legislation by the end of this week, before Congress adjourns until after the November 8th midterm elections.
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