LEWISTON, Maine — Maine Congressman Jared Golden has joined 26 other members of the U.S. House of Representatives in support of a bill to increase restrictions on members of Congress who trade individual stocks.
The bipartisan lawmakers wrote to House leadership Monday calling for a vote on a bill that would prohibit members of Congress from owning or trading stocks.
Two laws introduced in this legislative session that the group references are the Ban Conflicted Trading Act and the TRUST in Congress Act.
“We feel like being a member of congress is about public service and it shouldn’t be about using the office to enrich yourself," Golden said in his Lewiston office Tuesday.
Existing laws punish executives in the private sector, and anyone with confidential knowledge, from insider trading. Professional athletes are forbidden from betting on their own games for the same reason: using information that the common investor doesn't have creates an unfair advantage that benefits the individual and negatively affects the market for the investor.
Golden said Tuesday that he's not against members of Congress saving money for the future or for retirement but he does not want his colleagues to take advantage of insider knowledge that everyday American citizens do not have.
The Ban Conflicted Trading Act would ban members of Congress and certain staff members from holding or trading individual stocks except through a blind trust. The bill would also ban those same people from holding seats as a member or an officer for any for-profit board.
The TRUST in Congress Act would require the same trading bans for members of Congress and require them, their spouses, and dependent children to place any individual stocks in a blind trust and that trust would end 180 after the Congressmen's tenure in office.
Congresswoman Chellie Pingree, D-Maine, supports legislation to ban members of Congress from trading stock, specifically the TRUST in Congress Act, according to a spokesperson.
The STOCK Act of 2012 requires members of Congress to report all trades made in the stock market in a predetermined time frame after the transaction.
“There’s an existing law that obviously isn’t working," Golden said. "[The stocks] should have to be in a blind trust. Where you don’t have the ability to use the information you are given as a member of Congress in order to make those investments.”
Bert Smoluk is a professor of finance at the University of Southern Maine. He said politicians taking advantage of the market benefits them and hurts the common investor with no inside knowledge.
"It’s coming at the expense of the average investor and the average investor is going to lose confidence in the market," he said.
Lawmakers who use background information to either buy more stock or sell stock will also affect the average investor. Smoluk said if a person wanted to invest in a stock a certain politician invested heavily in, the person would have to pay a higher price per share.
The reverse is also true: if a politician sells a stock because they know something will impact prices, individuals owning the same stock will be forced to see their shares at a lower price.
Golden said some politicians are abusing their power by manipulating the stock market in their favor.
“I would hope the Speaker of the House takes [the letter] seriously and listens to us and the American people and takes a bill to floor," Golden said.
He said he does not know if or when House leadership will respond to the bipartisan letter and bring a bill to the floor for a vote.