Push for Trading Ban Bedevils Congress

BY KATY STECH FEREK

WASHINGTON—While running for Congress last year, Republican Rob Bresnahan—like most Americans—hated the idea of lawmakers making money by trading individual stocks in elected office and said he wanted to ban the practice.

Then he won his race. Now a congressman representing northeastern Pennsylvania, Bresnahan is one of the most active traders in Congress and is drawing political heat for some of the transactions, which he says are handled by an adviser who doesn’t consult him on trades.

He recently suggested he wouldn’t follow through on his plan to put his investment portfolio in a blind trust as an ethical firewall. He introduced his own bill to restrict stock trading that ethics advocates and colleagues have said is weak—though he said on Wednesday he would back a new bipartisan plan.

When asked in a Scrantonarea radio interview in July if he planned to tell his adviser to stop trading stocks to avoid backlash, he replied: “And then do what with it? Just leave it all in accounts and just leave it there and lose money and go broke?”

Hannah Pope, a spokeswoman for Bresnahan, declined to say whether he plans to follow through with his plans for a blind trust. She said Bresnahan’s trades are executed without his input. “Any suggestion that Rob has involvement in his financial planner’s trades is complete and utter bulls—,” she said.

Many lawmakers decry stock trading on principle, only to back off later when faced with the practical impacts—ranging from transaction costs and taxes to annoyance over being told how to conduct their finances. While some are plowing ahead on ideas for new bans, passage remains uncertain after a history of failed efforts.

Mixed views

Proponents of a crackdown see trading as an obvious opportunity for corruption. Opponents note that insider trading is already illegal and say that new rules would discourage successful businesspeople from running for Congress.

Sen. Rick Scott (R., Fla.), one of Congress’s wealthiest members, with investments in private equity and hedge funds, in a recent hearing raised questions about how lawmakers would sell illiquid assets under a stock-trading ban. Scott, who hasn’t reported any stock trading this year, said supporters of a ban were insinuating that a lawmaker’s wealth is bad.

“This idea that we’re going to attack people because they make money is wrong,” he said.

Scott voted against advancing a stock-ban proposal from Sen. Josh Hawley (R., Mo.) in committee. On Wednesday, a representative for Scott said he supports a congressional stocktrading ban but said Hawley’s draft came together hastily.

Rep. Gil Cisneros (D., Calif.), one of the most active traders in the House, said this year that he opposes broad trading bans. He would, however, support restrictions on investing in industries that lawmakers oversee. “I think our standards are too loose here,” he said. He added that his trades are handled by an outside financial manager.

Rep. Greg Landsman (D., Ohio) sold off his last individually owned stock in May, after moving his family’s investments into mutual funds. The switch meant he had to pay more than $115,000 in capital-gains taxes. “It’s a lot of money, but we have to rebuild trust,” he said.

President Trump said he is “conceptually” open to restrictions, and Treasury Secretary Scott Bessent said he was willing to start pushing for a stocktrading ban. Advocates cite a 2023 University of Maryland survey that found 86% of Americans favor a stock-trading ban.

Many don’t trade

Only a third of House lawmakers and slightly less than half of senators traded individual stocks or held them as assets while in office last year, according to a Wall Street Journal analysis of filings. It is more common for lawmakers to hold investments in mutual funds, which wouldn’t be affected by most of the current trading-ban proposals.

New bipartisan legislation negotiated by lawmakers including Reps. Seth Magaziner (D., R.I.), Chip Roy (R., Texas) and Alexandria Ocasio-Cortez (D., N.Y.) was rolled out on Wednesday. The proposal would give lawmakers 180 days to sell off stocks or face fines. The proposal would allow lawmakers to delay paying taxes on the sale of individual stocks if they reinvest that money in mutual funds or similar products.

“When this issue comes up at town halls or events anywhere in the country, people go nuts because it is crazy to the average person that has been allowed to go on for so long,” Magaziner said at a press conference.

In a hallway interview after the initial publication of this article, Bresnahan said he planned to back Magaziner’s measure.

House Speaker Mike Johnson (R., La.) signaled he wasn’t ready to put a trading ban up for a vote. “It’s generally a policy I’ve always favored, but we have lots of different opinions” among Republicans, he said.

Lawmakers passed the Stock Act in 2012, mandating more disclosures and explicitly outlawing trading on nonpublic information, but further efforts sputtered. In 2021, then-House Speaker Nancy Pelosi (D., Calif.)—whose husband’s trades have become a target of conservative critics and goodgovernment groups—defended lawmakers’ ability to trade. “We are a free-market economy,” she said. “They should be able to participate in that.”

Pelosi reversed her position and backed a ban but never brought it up for a vote.

A few vocal opponents can persuade leadership not to advance restrictions, said Dylan Hedtler-Gaudette, acting vice president of policy and government affairs at the nonprofit Project on Government Oversight. “Even if there’s a handful of people who trade, that handful matters,” he said. “They can basically kill the whole thing.”

Bresnahan, 35, ran his family’s highway and industrial electrical business before winning his seat. Since taking office in January, he has made more than 600 individual stock trades, according to an analysis of financial-disclosure reports as of Aug. 21.

Critics have spotlighted the trades. The political wing of the Natural Resources Defense Council, an environmental group, ran ads about Bresnahan’s purchases of stock in companies such as Valero Energy before voting to repeal clean-energy tax credits.

On Tuesday, Scranton’s Democratic Mayor Paige Cognetti announced plans to challenge him and cited his stock trades.