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Treasury Secretary Backs Stock Trading Ban for Lawmakers Amidst Growing Scrutiny

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  Published in Stocks and Investing on Thursday, August 21st 2025 at 5:15 GMT by Fox 11 News
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The debate surrounding whether government officials should be allowed to trade stocks has intensified recently, and now a key figure is throwing his weight behind a ban. Treasury Secretary Janet Yellen publicly endorsed legislation aimed at preventing members of Congress and other high-ranking federal employees from trading individual stocks, signaling a significant shift in the conversation around insider influence and ethical conduct within government.

The push for this ban, often referred to as the "Pelosi Act" after former Speaker Nancy Pelosi’s controversial stock dealings, has gained momentum following increased scrutiny of lawmakers' financial portfolios. The core argument centers on the potential for conflicts of interest when elected officials have investments that could be influenced by their legislative actions or access to non-public information. Critics argue that even the appearance of impropriety erodes public trust in government institutions.

Secretary Yellen’s support, delivered during a recent interview with Bloomberg Television, represents a powerful endorsement from within the Biden administration. She stated that while she hadn't reviewed the specific legislative language, she believes it is "appropriate" to restrict stock trading for those in positions of power. This stance aligns with President Biden who previously expressed his belief that such restrictions are necessary.

The proposed legislation aims to address this issue by prohibiting federal officials and their immediate family members from owning individual stocks. Instead, they would be limited to investments in broad-based mutual funds or exchange-traded funds (ETFs), which diversify risk across a wide range of assets. This approach is intended to mitigate the potential for insider trading and reduce conflicts of interest without completely eliminating participation in the financial markets.

The issue has been simmering for years, but recent events have brought it to a head. Former Speaker Pelosi’s stock trades, particularly those involving semiconductor companies shortly before a vote on legislation impacting that sector, drew significant criticism and fueled calls for stricter regulations. While she maintained her actions were compliant with existing laws, the controversy highlighted the potential for perceived conflicts of interest.

Senator Josh Hawley (R-Missouri) and Representative Jon Ossoff (D-Georgia) have been leading proponents of a bipartisan bill – the "Restricting Transactions of Politicians Act" or RTOPS Act – which embodies many of the principles behind the broader push for a ban. This legislation would not only prohibit stock ownership but also mandate blind trusts for assets held by lawmakers and senior government officials, further distancing them from their investments.

The current legal framework governing congressional trading is relatively weak. The Stop Trading on Congressional Knowledge (STOCK) Act of 2012 was intended to address insider trading concerns, requiring members of Congress to disclose stock transactions within 45 days. However, enforcement has been lax, and loopholes have allowed some officials to circumvent the spirit of the law. Furthermore, the reporting deadlines are often missed, and penalties for non-compliance have historically been minimal.

The debate isn’t without its detractors. Some argue that a complete ban infringes on personal financial freedom and unfairly restricts lawmakers' ability to manage their assets. Others contend that existing disclosure requirements, coupled with stricter enforcement of the STOCK Act, would be sufficient to address the problem. However, proponents maintain that the potential for abuse is too great to ignore and that a more comprehensive solution is necessary to restore public confidence.

The momentum behind this legislative effort appears strong, with bipartisan support growing in both the House and Senate. Secretary Yellen’s endorsement further strengthens its prospects of passage. While challenges remain – including navigating potential legal hurdles and addressing concerns about individual liberties – the push for a ban on stock trading for lawmakers represents a significant step towards greater transparency and accountability within government. The ultimate goal is to ensure that elected officials are acting in the best interests of their constituents, free from the influence of personal financial gain. The conversation extends beyond Congress as well. As noted in related reporting, the SEC has also been considering stricter rules regarding trading by federal employees. This broader effort underscores the widespread recognition that reforms are needed to address potential conflicts of interest and maintain public trust in government institutions.