Johnson Continues Efforts to Ban Individual Stock Trading for Members of Congress

Washington, D.C. – Today, U.S. Representative Dusty Johnson (R-S.D.) cosponsored the Restore Trust in Congress Act, which bans members of Congress and their families from buying and selling individual stocks during their time in Congress. This bipartisan legislation was introduced by U.S. Representatives Chip Roy (R-TX) and Seth Magaziner (D-RI).

“Athletes can’t place bets on games they play in because they have too much of an influence on the outcome. It should be the same for members of Congress – our votes can influence the market or the success of a particular company,” said Johnson. “Serving in Congress is a public service, not a chance to strike it rich. Passing this bill will restore some of the honesty and trust that has been lost in our institution.”

“It’s far past time to ban members of Congress from day trading stocks, and for the first time, a bipartisan coalition is standing together behind a united proposal to do just that,” said Rep. Chip Roy. “The Restore Trust in Congress Act ensures that members of Congress will no longer be able to put the stock market first in their official decisions. This bill strikes a balance between being easy to comply with, but without tons of loopholes for members to continue trading while on the job. We must vote on this bill and put this conflict of interest to bed for once and for all. I look forward to seeing the Restore Trust in Congress Act move through the legislative process.”

Johnson has not bought or sold an individual stock since coming to Congress in January 2019. He has repeatedly called to prohibit individual stock trading for members of Congress. 

The Restore Trust in Congress Act:
Covered assets:

• Prohibits all members of Congress, their spouses, dependent children, and their trustees from owning, buying or selling individual stocks, securities, commodities, or futures.
• The following exceptions are permitted:
  • Widely held investment funds such as mutual funds and ETFs, provided that they are diversified and not concentrated in any industry, business, or single country other than the United States or single state, except for Member’s state of residence
  • U.S. Treasury, state, or municipal bond, note, bill
  • Precious metals (gold, silver, etc.)
  • Shares of Settlement Common Stock, as defined in the Alaska Native Claims Settlement Act
  • An interest in a small business concern
  • Family trusts if no covered individual is a grantor of the trust, has contributed any asset to the trust, has any authority over a trustee of the family trust, or the grantor of the family trust is or was a family member of a covered individual
  • An asset that is received as compensation from the occupation of a spouse or dependent
  • An asset that is not owned by a spouse or dependent but is traded on behalf of others through their primary occupation
  • Personal residences in LLCs

Process for Divestment:

• Upon enactment, covered individuals are prohibited from purchasing covered assets and must divest from all covered assets at fair market value within 180 days for current members and 90 days for incoming members. Individuals who acquire covered assets through inheritance during the course of their service will be required to divest those assets within 90 days of receipt.
• Members may apply to the supervising ethics committee for an extension of a divestment deadline if investment can't be sold by a deadline due to low liquidity, vesting schedules, or contractual restrictions.
• Capital gains taxes may be deferred for all divestments through a Certificate of Divesture process, as is currently permitted for executive branch employees.
  • For example, if a member divests all previously held individual stocks and reinvests in a mutual fund, the taxes on the sale of the individual stocks may be deferred until the member later sells out of the mutual fund.

Enforcement:

• Supervising ethics office to impose and enforce penalties and issue any additional guidance.
  • Fine
    • Equal to 10% of value of covered asset plus disgorgement of profits
    • Must be paid with personal funds, not office or campaign funds
  • Supervising ethics office will publicly disclose fines and disciplinary outcomes

Click here for full bill text.