Senate Democrats Block Congressional Stock Trading Bill

TL;DR: Senate Democrats unanimously blocked the House-passed Stop Insider Trading Act on Wednesday. The bill would have barred members of Congress, their spouses and dependent children from buying individual stocks and required advance notice before stock sales. Democrats said the measure did not go far enough and objected to a voter ID provision attached to the bill. Both Alabama Senators Tuberville and Britt voted to advance the bill.

Every Senate Democrat voted Wednesday against advancing a House-passed bill that would restrict members of Congress and their families from buying individual stocks.

The Stop Insider Trading Act failed on a 53-47 procedural vote, seven votes short of the 60 needed to move forward. All 53 Republicans voted to advance the bill. All 47 Democrats voted against it.

That means the Senate did not hold a final up-or-down vote on the bill itself. Instead, Democrats denied Republicans the votes needed to end debate and move toward consideration.

The bill, H.R. 7008, had already passed the House in July on a 232-198 vote, with 13 Democrats joining Republicans in support. It was introduced by Rep. Bryan Steil (R-WI).

The bill would prohibit members of Congress, their spouses and dependent children from purchasing securities issued by publicly traded companies. It would also require public notice between seven and 14 days before covered stocks could be sold.

Violators could face a penalty of $2,000 or 10% of the value of the investment, whichever was greater. Any profit from a sale made in violation of the law would also have to be forfeited.

The measure was not a complete ban on congressional stock ownership. Members could keep stocks they already owned and later sell them after giving advance notice.

That distinction became a central part of the Democratic argument against the bill.

Senate Minority Leader Chuck Schumer (D-NY) called the bill “as ineffective as a screen door on a submarine.” Democrats argued that Congress should adopt a broader ban covering both the purchase and ownership of individual stocks.

There was another major sticking point.

House Republicans had combined the stock trading restrictions with a nationwide voter ID measure. The final House bill requires voters to show valid photo identification when voting in person in federal elections. The two measures were combined before final passage.

Democrats called the voter ID language a “poison pill.”

Senate Democratic Whip Dick Durbin (D-Ill.) described the package as “a voter suppression bill masquerading as an inadequate congressional stock trading ban.”

Republicans saw it differently.

They argued that both provisions — requiring identification to vote and restricting lawmakers from buying individual stocks — were reforms that should draw broad support.

Sen. Pete Ricketts (R-NB), who pushed the House bill in the Senate, had previously argued on the Senate floor that the two provisions were about restoring public trust.

“It is about integrity. Integrity inspires confidence,” Ricketts said during an earlier attempt to move the bill.”

The debate is more complicated than a simple partisan split over whether lawmakers should trade stocks.

A tougher proposal already exists in the Senate.

Sen. Josh Hawley (R-MO) has backed legislation that would go further by barring covered officials from both trading and owning individual stocks. That proposal advanced through the Senate Homeland Security and Governmental Affairs Committee but has not received a floor vote. Hawley himself acknowledged the House measure was weaker than the approach he preferred.

Democratic Sen. Alex Padilla of California said he would have supported Hawley’s stronger bill if Republican leaders had brought it to the floor.

“Instead, they had this sham bill with the poison pill provisions,” Padilla said.

Even some Republicans questioned the decision to attach voter ID to the stock trading bill.

Sen. Thom Tillis (R-NC) said the move may have given Democrats who did not want to vote for stock restrictions an easy way out.

“I think strategically it gave them an out for a policy that I think is critically important,” Tillis told Roll Call. “That to me is a messaging exercise going bad.”

Still, when senators were asked Wednesday whether the House-passed bill should move forward, the result was clear: 53 Republicans voted yes and 47 Democrats voted no.

Both of Alabama's Republican senators, Tommy Tuberville and Katie Britt, were among those voting to advance the measure.

The defeat leaves the current system largely intact.

The 2012 STOCK Act makes clear that members of Congress are subject to federal insider trading laws and requires disclosure of many securities transactions. But critics across the political spectrum have argued for years that disclosure alone does not resolve the conflict created when lawmakers who receive sensitive government information can own and trade individual stocks.

For now, Congress remains stuck on the same basic question it has debated for years: not whether lawmakers' stock trading raises concerns, but how broad a ban should be — and what other political priorities lawmakers are willing to attach to it.

Wednesday‘s vote makes the Democrat’s position perfectly clear on the issue — so long as a voter ID provision is included.