In 2023, Business Insider and several other news organizations identified 78 members of Congress who failed to properly report their financial trades as mandated by the Stop Trading on Congressional Knowledge Act of 2012, also known as the STOCK Act.
In 2026, House Republicans advanced a limited measure targeting lawmaker stock ownership but balked at comprehensive insider trading and prediction market bans. While some GOP lawmakers pushed for stricter limits, party leadership and Senate Republicans stalled or heavily watered down stronger proposals.
The congressional insider trading problem stems from lawmakers leveraging their access to confidential, non-public information— such as classified briefings, pending legislation, and committee hearings—to make highly profitable stock trades. This practice creates inherent conflicts of interest and raises severe concerns regarding public trust, according to the Brennan Center.
Federal law, including the 2012 STOCK Act, makes insider trading explicitly illegal for members of Congress. However, lawmakers continue to face heavy public and ethical criticism for trading individual stocks in industries they regulate, as well as exploiting legal loopholes and weak penalties.
The STOCK Act legally affirmed that members of Congress and their staff are not exempt from securities laws regarding insider trading. The law explicitly prohibits lawmakers from utilizing material, non-public information— gleaned from their congressional duties— for personal financial gain.
However, lawmakers continue to face heavy public and ethical criticism for trading individual stocks in industries they regulate, as well as exploiting legal loopholes and weak penalties.
Under current Securities and Exchange Commission (SEC) rules, members of Congress are not strictly considered corporate 'insiders' for the purpose of a traditional insider trading prosecution.
While illegal for anyone to trade on material non-public information, the nature of congressional work often makes it difficult to link a lawmaker's trade to a specific company's earnings rather than broader market movements or upcoming government policies.
Lawmakers routinely sit on committees that regulate specific industries (e.g., technology, defense, or pharmaceuticals) while simultaneously holding stock in corporations within those same sectors. This creates the appearance— and reality—that their votes may be driven by personal financial gain rather than the public good.
The TRUST in Congress Act / Restore Trust in Congress Act: These bipartisan proposals seek to outright ban members of Congress and their immediate families from buying or selling individual stocks while in office. Lawmakers would be required to divest or place their existing holdings into a qualified blind trust.
The Stop Insider Trading Act (SITA): This legislation aims to tighten regulations and increase financial penalties for lawmakers who violate stock disclosure requirements.
Despite the legal prohibition, lawmakers continue to face scrutiny due to several major issues: The Appearance of Impropriety: Lawmakers regularly sit on committees that oversee major sectors (such as defense, technology, and healthcare) while actively trading stocks within those same industries.
Weak Enforcement: No member of Congress has ever been successfully prosecuted for insider trading under the STOCK Act.
Delayed Disclosures: Lawmakers have up to 30 days to notify the ethics committees and up to 45 days to publicly disclose their trades, which prevents the public from seeing these conflicts of interest in real-time.
Prediction Markets: With the explosion of prediction markets like Polymarket and Kalshi, lawmakers have raised concerns about government officials exploiting non-public information to place profitable wagers on world events and elections.
Because of public outrage and conflicts of interest, multiple bipartisan bills have been introduced to ban members from trading individual stocks. At the Congressional level, several proposals, such as the Prohibit Insider Trading Act, aim to mandate lawmakers to place their assets into blind trusts or restrict them entirely to diversified mutual funds. The U.S. Senate previously approved a resolution to prevent senators from making bets on prediction markets, pushing the House of Representatives to consider similar rules.
The concern extends beyond the federal level. For instance, in states like Michigan, lawmakers have pointed out that while executive branch employees are barred from betting on prediction markets using their insider knowledge, the state's legislators face no such ban.