Congressional legislation targeting insider stock trading by lawmakers receives House approval
According to the legislation's sponsor, the Stop Insider Trading Act implements severe financial penalties designed to prevent members of Congress from exploiting privileged information to gain profits through securities transactions.
Legislation designed to effectively prevent congressional members, along with their spouses and dependent children, from acquiring publicly traded securities has received approval from the US House of Representatives.
Speaking from the House floor on Wednesday, Steil emphasized the unprecedented nature of this legislative opportunity, stating that "We have not had a bill on the House floor on this topic with this opportunity before," while outlining the specific penalties included in the measure:
"A fine equal to $2,000 or 10% of the transaction, as well as a disgorgement of profits. Violators would be forfeiting any gain realized if they failed to comply with this legislation."
Critics from the Democratic party argue that the legislation falls short of adequately addressing possible conflicts of interest, given that it permits lawmakers to retain and divest stocks currently in their portfolios. Steil countered this criticism by explaining that the bill would mandate congressional members to give seven days' advance notification prior to divesting stocks from their existing holdings, thereby establishing a safeguard against insider trading practices.
Senator Elizabeth Warren voiced her opposition on Thursday, stating that "[The] bill has major loopholes," adding that "Lawmakers can continue owning and selling stocks — so it won't solve the problem. Not gonna fly in the Senate. Members of Congress should not own, buy, or sell stocks."
Following its approval in the House, the Stop Insider Trading Act arrived at the US Senate on Thursday for deliberation.
In contrast to the proposed language contained in the Digital Asset Market Clarity Act, which is a cryptocurrency market structure bill currently being reviewed in the Senate, Steil's legislation exclusively focuses on restricting investments by congressional members rather than extending these prohibitions to the president or vice president and their respective families. The proposed CLARITY Act language would impose restrictions preventing all US public officials from issuing or sponsoring tokens through 2029.
Prediction markets bill also under consideration
The House's endorsement of the Stop Insider Trading Act came after Steil sponsored related legislation aimed at restricting congressional members from engaging in trading activities on prediction market platforms such as Kalshi and Polymarket. In June, the Wisconsin lawmaker put forward the Stop Lawmakers from Predicting Act with the intention of prohibiting specific public officials, including their spouses and children, from "wagering on public policy issues and political outcomes."
Public attention was drawn to prediction markets following an incident in which a soldier purportedly earned more than $400,000 through wagers on Venezuela President Nicolás Maduro, who was removed by US forces in January. Additionally, Donald Trump's teleprompter operator is reported to have earned more than $100,000 through betting on Kalshi event contracts linked to specific words and phrases featured in the president's speeches.
Similar to the stock trading legislation, the prediction markets bill stipulated that individuals found in violation would be required to pay a $2,000 fee or 10% of the value of the prohibited bets placed on the platforms.