Proposal for the “Pelosi Act” to Prohibit Insider Trading Among Members of Congress and Their Spouses
Introduction
Insider trading among members of Congress undermines the integrity of public office and erodes public trust in government. Members of Congress have access to privileged, non-public information due to their positions, and this information should never be used for personal financial gain. The “Pelosi Act” proposes strict regulations to prevent insider trading by Senators, Representatives, and their spouses, especially when they serve on committees directly relevant to industries in which they have financial interests.
Objective
To establish clear, enforceable measures that prevent insider trading among members of Congress and their spouses, requiring the forfeiture of any profits gained from such activities and imposing significant penalties, including prison sentences, for violations.
Key Provisions of the Pelosi Act
Complete Ban on Trading Related to Committee Influence
Members of Congress and their spouses will be prohibited from trading stocks, bonds, or other financial interests in industries over which they have direct oversight due to their committee assignments. For example, a Senator serving on the Energy and Natural Resources Committee would be barred from trading energy stocks.
Mandatory Disclosure and Blind Trusts
Members of Congress and their spouses must place their financial assets into blind trusts to prevent any influence on specific investment decisions. This removes both the temptation and the opportunity to act on non-public, legislative information for personal gain.
Mandatory Disclosure of Financial Transactions
All financial transactions conducted by members of Congress and their spouses, regardless of the committee, must be disclosed to the public within seven days. These disclosures will be made available in a searchable, publicly accessible database managed by an independent ethics office.
Strict Penalties for Violations
Members and spouses found guilty of insider trading will be required to:
Return all monetary gains from trades influenced by insider information.
Serve a minimum prison sentence commensurate with the offense, with a guideline of 5-10 years for significant violations. This will signal a clear deterrent and emphasize that holding public office is a position of service, not personal enrichment.
Independent Oversight and Investigation Body
An independent Congressional Ethics and Trading Oversight Board (CETOB) will be established to investigate potential violations. This body will be empowered to issue subpoenas, conduct audits, and recommend cases for criminal prosecution if violations are found. CETOB will report directly to both chambers of Congress and the Department of Justice to ensure accountability.
Annual Audits and Reporting
An annual audit will be conducted on all members of Congress and their spouses’ financial transactions, with findings reported to the public and Congress. This measure ensures ongoing compliance with the Pelosi Act and helps to restore public trust.
Implementation Plan
Legislation and Amendment: The Pelosi Act will require passage through both houses of Congress and Presidential approval. Due to the significance of the measure, amendments to existing ethics laws may also be considered to enhance enforceability.
Public Awareness and Accountability Campaign: To ensure public awareness, a campaign to inform citizens about these protections will be launched. This will emphasize the importance of accountability and allow voters to understand the seriousness of Congress’s commitment to ethical governance.
Educational Programs for Incoming Members: Newly elected members of Congress will undergo training on ethical financial practices, the provisions of the Pelosi Act, and the severe consequences of insider trading violations.
Conclusion
The “Pelosi Act” is designed to end insider trading within Congress, safeguarding public trust and ensuring that elected officials prioritize their duty to the American people over personal financial interests. By imposing strict penalties, mandating disclosure, and establishing independent oversight, this legislation will ensure that members of Congress and their spouses are held to the highest ethical standards. With the Pelosi Act, we affirm that public service is a privilege, not a pathway for personal gain, and hold our leaders accountable to the integrity and transparency expected by the American people.
The purpose of this proposal is admirable. It is unfortunately named and, because of that, I fear it might not get the attention that it deserves. Regardless of the inspiration, the proposal has merit across the board.
What motive would there be to serve in the government than a bill that restrics easy profiting from bills created to manipulate markets in the guise of “helping the people”. This would be the best way to see who’s really for us vs themselves. Good work. PS, the “Pelosi Act” is savage. Lol
I think this could have two names. Sort of like The affordable care act is called Obamacare. It’s only going to be offensive to the criminal and those who agree that insider trading is ok. Just my 2cts. I love this idea. Doesn’t really matter what it’s called if it passes and is enforced.
Well, I’ll have to remain in disagreement with you. At least we read the thing. Can’t imagine anyone not doing that, thinking its just another partisan piece because of the title.
I absolutely agree. These career politicians should not be able to get filthy rich on insider information. I know using insider information is already illegal, but I have never seen a single congress member be prosecuted as a result.
Yes, the STOCK Act of 2012 is still in effect, but some provisions have been modified since its passage. The core requirements—such as prohibiting insider trading by members of Congress and federal officials and requiring timely disclosure of financial transactions—remain in place. However, certain parts of the law were softened shortly after it was enacted:
Reduced Public Disclosure for Certain Employees: In 2013, Congress amended the STOCK Act to remove the requirement for senior executive branch employees to post their financial information publicly on the internet. This change was justified on privacy and security grounds but kept the disclosure requirement for members of Congress and high-level federal officials.
Enforcement Concerns: While the STOCK Act mandates timely disclosure, enforcement of these rules has faced scrutiny. Some members of Congress have faced fines for failing to disclose transactions within the required 45-day period, though the penalties have been relatively minor, leading critics to question the act’s overall effectiveness.
Despite these modifications, the STOCK Act remains in effect, and members of Congress, as well as certain government employees, are still required to report their stock trades and adhere to insider trading laws. There is ongoing debate about strengthening the act to close potential loopholes, with some lawmakers calling for an outright ban on stock trading for members of Congress to further reduce conflicts of interest.
The STOCK Act of 2012 was a significant step toward preventing conflicts of interest in government, but it has some loopholes and weaknesses that reduce its effectiveness. Here are key loopholes and potential ways to strengthen the law:
1. Delayed Reporting and Minimal Penalties
Loophole: Lawmakers must disclose stock trades within 45 days, but many miss this deadline, and the fines for late disclosures are minimal—typically $200.
Improvement: Enforce stricter penalties for late disclosures, increasing fines or creating a tiered penalty system based on the delay’s length. Shorten the disclosure window to 24–48 hours, similar to rules for executives in publicly traded companies.
2. Broad “Blind Trust” Loophole
Loophole: Officials can use “blind trusts” for their assets, claiming that they have no control over their investments. However, some trusts are not truly “blind” and still allow officials to know their holdings.
Improvement: Mandate that blind trusts must be independently managed with no communication or updates provided to the official. Enforce clear guidelines for setting up and maintaining truly blind trusts.
3. No Ban on Individual Stock Ownership
Loophole: Members of Congress and federal employees are still allowed to buy and sell individual stocks, creating a potential for conflicts of interest.
Improvement: Ban members of Congress, their spouses, and immediate family from owning or trading individual stocks while in office. Allow investments in diversified mutual funds or index funds, which carry less risk of conflict.
4. Insufficient Oversight and Enforcement
Loophole: The STOCK Act lacks a robust enforcement mechanism, and there is no independent agency dedicated to overseeing compliance.
Improvement: Establish an independent ethics oversight body with investigative authority and the power to levy meaningful fines and penalties for violations. Increase funding for the Office of Congressional Ethics to improve monitoring and enforcement.
5. “Political Intelligence” Industry Loophole
Loophole: Lobbyists and consultants can gather “political intelligence” (non-public information from government sources) to inform clients’ trading decisions, sidestepping the STOCK Act.
Improvement: Require lobbyists and firms that gather political intelligence to register and disclose their activities, similar to rules for lobbying firms. Consider further regulations to limit the use of non-public government information for financial gain.
6. Insider Information from Spouses and Family Members
Loophole: The act does not cover trades made by lawmakers’ spouses or family members, which creates a pathway for indirect profiting from insider knowledge.
Improvement: Extend the STOCK Act’s restrictions to spouses and immediate family members, requiring disclosure of trades and prohibiting the use of insider information within households.
7. Weak Requirements for Lower-Level Employees
Loophole: Only high-level officials and lawmakers are required to disclose stock trades, even though lower-level employees may also have access to sensitive, non-public information.
Improvement: Extend disclosure requirements to mid-level and lower-level federal employees in sensitive or high-risk departments (e.g., Treasury, SEC, Federal Reserve) to prevent abuse of insider information.
8. Inconsistent Public Access to Information
Loophole: Although some information is made available online, it’s often difficult to access, inconsistently updated, and not user-friendly, making it harder for the public and media to monitor.
Improvement: Create a centralized, user-friendly online platform where all disclosures are easily accessible, searchable, and updated in real time, increasing transparency and public oversight.
Summary of Recommended Improvements:
Shorten reporting windows to 24–48 hours and increase fines for delays.
Mandate truly independent blind trusts for asset management.
Ban individual stock trading for members of Congress and senior officials.
Establish an independent ethics oversight body to monitor compliance.
Require “political intelligence” firms to register and disclose their activities.
Extend disclosure and trading restrictions to spouses and immediate family.
Expand disclosure requirements to cover mid- and lower-level employees in sensitive agencies.
Improve the public disclosure platform for transparency and accessibility.
These changes would strengthen the STOCK Act, addressing loopholes that allow insider trading and conflicts of interest to persist among government officials.
Objective: to bring back confidence in our elected officials
No elected congress person, senator or other elected official in the federal government or their immediate family (spouse, children, grandchildren, in-laws, and other close relatives)
May increase their net worth by more than 20% or the gain of the total stock market index (whichever is greater) per year. These number are suggestions but the goal is to equal the net worth increase of what an average middleclass law abiding person makes in an average year through investments in a 401K, mutual fund, property or other investment.
Net worth over this limit is paid as a 100% tax of some kind and recorded in a fund for just this purpose.
A bi-partisan group could make exceptions for children transitioning from college to a job, marriage, or other obvious common life situations. For example a spouse of a congressperson who changed to a higher paying job or started employment after not being employed could take that job with no penalty if the group deemed it a normal situation. The same would apply to a single official who married a rich spouse, there would be no penalty until the following year when the 20% maximum would begin.
After public service income from new opportunities such as speeches, lobbying, new careers and other opportunities which resulted from time in government, fame and name recognition would not be affected. For example an ex-president could give speeches at a high cost with no penalty.
The IRS would be required to do a thorough investigation of each public servant.
Goal
To remove the incentive for insider trading, bribes, money laundering, selling influence etc. Things that are easy to get away with and hard to prove and quite honestly help cause the average voter to lose faith in the congress, the senate and the presidency as a whole.
Specific examples
Presidential children would be permitted to sell paintings at whatever price they wish but must turn over all profit over 20% of their previous year’s net worth until after their fathers presidency is over. This would reduce the image of bribes for influence.
Spouses of senators or congresspersons would be able to invest in stocks, mutual funds and other investments, but profits over the total market index would have to be sold and turned over into a fund for that purpose, including non realized capital gains on stocks purchases while in office. When the market goes down this money would be returned as a rebate to the official the following tax year equal to a 20% profit. This would reduce the image the public has of insider trading.
The goal is not to bankrupt or punish a honest public servant or their family when the total market index goes down but to remove incentives to do what is illegal for regular voters. For example an honest senator who has a blind trust and earns a 20% profit in a year when the total index earns 25% would have to give the extra 5% to the general government fund, but this will be recorded for future reference. In a year when the market goes down 20% the sacrificed gains from previous years will be returned to a maximum of 20% of their net worth. At the end of their government service all money over the 20% average per year threshold would be lost and turned over the general government fund.
Possible concerns
Elected officials would possibly be earning less money than if they remained in the private sector. This would be the definition of public service. The result could be fewer lower income excellent candidates running for office but would also reduce the number of dishonest candidates. Right now the impression is that many public officials are in it to get rich and since they are from other states or districts cannot be voted out of office easily.
Family member would be affected who did not wish to run for office. This would be equivalent to the parent of a worker who has a son working in industry and learned of a breakthrough discovery and cannot invest in that company legally due to insider trading laws.
Windfalls such as property value increases, inheritance, or other common life changes would be exempt through the bipartisan group.
Results
Faith restored to the honesty of government employees.
Reduction of influence pedaling or bribes.
Weaknesses
Dishonest members could be promised super high paying jobs later as a reward for present influence pedaling.
Bribes paid after a government official leaves their job.
This act is needed to stop ALL members from BOTH parties from profiting off legislation. It needs a better name than PELOSI.
A recent example in addition to Pelosi is Rep Michael McCaul of Texas. His wife and family invested heavily in competitor Meta in 2024 from advance knowledge of legislation banning TikTok. While the politician didn’t make the investments, his family sure did. It’s criminal that these politicians and their friends and family think they are above the insider trading laws that the rest of us have to follow.
Don’t get me started about the multiple politicians from both parties who profited off of insider knowledge to profiteer during the early days of the pandemic. They should all be in jail.
How about find a name that works as an acronym related to CHEATING, UNETHICAL, DISHONEST, or SHADY.