Congressman Jim Himes (CT-4) is cosponsoring legislation that prevents Members of Congress and their staffs from trading stocks based on nonpublic information they obtain through their work in Congress. While Members of Congress are subject to the same insider trading rules as other individuals, there are no specific regulations regarding their work in Congress.
"I am appalled that this legislation is necessary, but from what we've seen in the news this week, we can't take any chances," said Himes. "I am supporting this legislation because we must give Americans the confidence that their Representatives are acting exclusively in the interests of the people and communities they represent, not their own wallets."
The Stop Trading on Congressional Knowledge (STOCK) Act (H.R. 1148) prohibits Members of Congress and their employees from buying or selling securities, swaps, security-based swaps, or commodity futures based on nonpublic information they obtain because of their position. It also requires Members and their staffs to report those transactions within 90 days if the cost of the trade is more than $1,000.
Since taking office, Himes has actively worked to eliminate the possibility that conflicts of interest could occur in his personal operations. The week he was appointed to the House Committee on Financial Services, Himes voluntarily divested himself of any financial interests in the financial services and insurance industry. To eliminate even the appearance of a "pay-to-play" scenario for earmarks, Himes adopted a policy that prohibits executives, board members, and lobbyists of organizations that receive an earmark at his request from donating to his campaign. He also cosponsored legislation to prohibit that practice.
A study released this year, "Abnormal Returns from the Common Stock Investments of Members of the U.S. House of Representatives," found that the average stock portfolio held by a House member from 1985 to 2001 beat the market average by approximately six percent annually. In 2004, the average stock portfolio of a Member of Congress beat the market average by 10 percent.