Insider Trading in Congress

On March 12th, the Department of Defense canceled a $2.5 million grant to Intel, a chip-maker. After this news, Intel‘s stock dropped by 1.7% in late trading. Several members of Congress sold significant amounts of their Intel stock before the news surfaced. For example, Senator Tommy Tuberville sold $50,000 of his stocks on January 24, 2024. A spokesperson for the Senator claimed that Tuberville, "has long had financial advisors who actively manage his portfolio without his day-to-day involvement." When asked about Tuberville’s involvement in the sale of Intel stock, and if he knew about the cancellation of Intel’s grant, the spokesperson made no comment. Other members of Congress who had transactions connected to Intel stocks included Congressman Michael McCaul, and Senator Blumenthal. 

There are real ethical concerns about how members of the House and Senate deal with stocks, because they have insider information to guide their stock sales. Insider trading, the trading of a public company’s stock or securities based on confidential or non-public information about the company, is illegal; however, Congressmen often have leniency with their actions. Federal government employees are banned from participating in any actions which can impact the financials of a company they are invested in, and a violation of these laws can lead to five years in prison and $50,000 fines. Members of Congress, however, are not considered federal employees under the law, and are able to actively trade individual stock while also being able to work on legislation which can impact this stock. According to The New York Times, “97 lawmakers or their family members bought or sold financial assets over a three-year span in industries that could be affected by their legislative committee work.” Members of Congress have access to more insider information, and create a systematic problem, since they consistently outperform the market. While there have been bills proposed to ban Members of Congress from owning individual stock, which 86% of Americans support, there have been no active steps taken to prevent Congressmen from abusing their economic power.