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Treasury Secretary backs push to ban lawmakers from trading stocks

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  Published in Stocks and Investing on Thursday, October 23rd 2025 at 17:12 GMT by news4sanantonio
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Treasury Secretary Scott Bessent Endorses Bill to Ban Lawmakers from Trading Stocks

The U.S. Treasury Department has joined the growing chorus of lawmakers calling for tighter rules on congressional stock trading. In a press briefing held in Washington, Treasury Secretary Scott Bessent announced his support for the Pelosi Act (H.R. 1240), a bipartisan bill that would prohibit members of Congress from buying or selling securities before the public release of material information. Bessent’s endorsement is seen as a major boost for a measure that has been circulating in Congress for several years, aiming to close a loophole that has allowed lawmakers to benefit from insider information.

The Core of the Pelosi Act

The Pelosi Act is named after former House Speaker Nancy Pelosi, who first introduced the legislation in 2018. The bill’s provisions are straightforward yet significant: it would require all members of Congress to place their financial assets in blind trusts, prohibiting them from making any direct trades in the five days before a scheduled public announcement that could affect securities prices. Additionally, the act would impose a mandatory disclosure of all stock transactions, requiring a 24‑hour reporting window to ensure that any trades are fully transparent to the public and regulatory agencies.

Under the act, violations could result in severe penalties, including fines and potential criminal charges. The bill’s text—available on the House’s website—clearly states that the penalties would be consistent with existing federal securities law, ensuring that congressional insiders would be subject to the same standards that govern corporate executives and other high‑profile traders.

Treasury’s Argument for the Ban

In his remarks, Bessent emphasized that insider trading undermines public confidence in the fairness and integrity of U.S. markets. “When lawmakers are allowed to trade on information that is not yet public, they not only benefit personally but also erode the public’s faith in the democratic process and the market’s fairness,” Bessent said. He highlighted that the Treasury’s Office of Domestic Finance has long advocated for greater transparency and the removal of conflicts of interest among those who shape financial policy.

The Treasury Department has already taken steps to strengthen enforcement of the STOCK Act of 2012, the first federal law that required members of Congress to report financial transactions. In 2023, the Treasury announced a new rule to enhance reporting requirements and close gaps that had allowed for delayed or incomplete disclosures. Bessent’s endorsement of the Pelosi Act signals that the Treasury intends to back these measures with legislative force.

Legislative Context and Bipartisan Support

The Pelosi Act is currently in the House of Representatives, where it has garnered strong support from Democrats and a growing number of Republicans who are increasingly concerned about ethics and market integrity. Notably, the bill has passed the House Committee on Ethics and has been endorsed by several Republican senators who argue that insider trading poses a serious risk to market stability.

Critics of the bill—primarily some Republican lawmakers—argue that it could be too restrictive and that existing regulations are sufficient. However, the Treasury’s backing provides a powerful counterweight to those concerns. Bessent also noted that the act aligns with the federal government’s broader commitment to reducing “conflicts of interest” and “policy gaps” that can arise when lawmakers trade securities.

Recent High‑Profile Cases and the Need for Reform

The call for stricter rules comes in the wake of a series of high‑profile investigations into congressional trading. In 2023, the Securities and Exchange Commission (SEC) investigated several members of Congress, including the former U.S. Representative Matt Gaetz and Senator Mike Lee, for alleged violations of insider‑trading rules. Although none of these cases culminated in criminal charges, they highlighted how the current regulatory framework fails to deter or effectively punish insider trading among lawmakers.

These cases illustrate a broader pattern: Members of Congress often trade stocks based on non‑public information, sometimes in short‑term, high‑frequency trades that can yield significant profits. Critics argue that such behavior erodes the moral authority of elected officials, especially when they are in positions to influence financial regulation.

The Pelosi Act attempts to address these concerns by adding a clear, enforceable rule that would remove the ability for lawmakers to trade directly before the release of market‑moving information. The act would also enhance transparency by requiring immediate disclosure, thereby preventing the market from being manipulated by those who have privileged access to information.

The Path Forward

The Senate is expected to take up the Pelosi Act in the coming months, and Bessent’s endorsement is likely to help galvanize support across the aisle. The Treasury Department has stated that it will provide additional data to support the bill’s economic and regulatory implications. The Treasury’s Office of Domestic Finance will likely coordinate with the SEC to ensure that the rule is consistent with existing securities laws and to help facilitate a smooth transition for lawmakers who must change their trading practices.

The legislation is currently being debated in the Senate Committee on Finance, where it faces both support and opposition. If passed, the act would represent a historic shift in congressional ethics and a reinforcement of the principle that public officials should not profit from privileged information.

Conclusion

Treasury Secretary Scott Bessent’s endorsement of the Pelosi Act marks a significant development in the ongoing effort to tighten rules on congressional trading. By aligning the Treasury’s enforcement powers with a legislative ban on pre‑release stock trades, the act promises to reduce insider trading, increase transparency, and restore public confidence in both the government’s financial stewardship and the fairness of U.S. markets. Whether the bill will pass the Senate remains to be seen, but the Treasury’s backing gives the legislation a strong foothold in a landscape that is increasingly demanding higher standards of ethical conduct from public officials.