Photo: World Finance
Members of Congress have been criticized for trading stocks in companies involved in the industries they’re supposed to regulate. A few of them also reportedly traded stocks in early 2020 before the pandemic began.
Now, lawmakers are not forbidden from trading shares of companies affected by laws they pass. However, the Stock Act, passed in 2012, does ban them from using any nonpublic information for financial benefit. But casual stock trading can create conflicts of interest.
“That is precisely what I wanted to avoid when I first started running for Congress in 2017,” Mike Levin, a representative for California’s 49th Congressional District, wrote in his opinion piece.
“At that time, my wife and I divested from all of the individual stocks we held and moved everything into diversified mutual funds that are managed by a third party. While that step isn’t required by law, I felt it was my responsibility to go above and beyond to earn the trust of my constituents.”
Levin believes that his colleagues in Congress should take similar steps.
Levin wrote, “It’s time to pass the bipartisan Ban Conflicted Trading Act, which I am proud to cosponsor. That bill would ban members of Congress from trading individual stocks or similar investments and prohibit them from serving on corporate boards while in office.”
Levin further asserts that passing the Ban Conflicted Trading Act would be a critical step to restoring the public’s trust in Congress.
Many Americans see a culture of corruption in the government, and thus, they have little faith in their elected representatives. They are often cynical as well regarding the country’s democracy. Levin believes that passing the Ban Conflicted Trading Act can help mitigate that or even change it, with the American people now knowing that their representatives are focused on serving the public’s interests and not their own.
“Some of my colleagues argue such a ban is unfair to members who should have a right to trade individual stocks just like anyone else,” Levin continued. “However, I think it’s fair to say that when you take the oath of office, you are accepting an enormous responsibility that requires a higher standard of conduct than private citizens. We have been entrusted to put the public’s interest above our own, and maintaining that trust requires sacrifices.”
He added, “I have also heard from colleagues who raise legitimate concerns about who should bear the cost of divesting from individual stocks and transferring investments to mutual funds or blind trusts, which typically requires the assistance of finance professionals. I do not believe taxpayers should be asked to cover that expense, but I have also heard arguments that members themselves should not be forced to pay for that cost either.”
“I believe these obstacles are no excuse for abandoning the effort entirely. We need to have a discussion about our disagreements, and then press forward. Passing this bill is one of many steps we must take now to show our constituents we are working for them, not our own financial self-interest.”
Levin understands that his stance will “surely ruffle some feathers” as debate around the bill has increased in recent months. His colleagues in his own party even disagree with his stance, but he still believes it is the right thing to do.
He concluded, “Our country is more divided than ever in his article than ever. But I believe that we can still come together to do the right thing and restore some faith in our political process. Passing the Ban Conflicted Trading Act would be an important step in the right direction.”
Opinions expressed by California Gazette contributors are their own.