OPINION:
If you work in finance, you learn a simple rule fast: Trading isn’t just a personal decision; it’s a compliance event. You preclear trades, you live with blackout periods, you document everything. It takes just one trade made with nonpublic information to land you in court.
Those guardrails exist for a reason. Insider trading isn’t merely “unfair.” It corrodes confidence in the market itself. When people believe the game is rigged, they pull back. The damage doesn’t stay on a trading floor. It hits retirement accounts, pensions and 401(k)s.
Working families who don’t have a lobbyist whispering what’s coming next.
Now, compare that standard with what we tolerate from members of Congress.
These people are no ordinary market participants. They are the lawmakers. They sit on committees. They write and shape rules that can move entire sectors — defense, energy, tech, health care — with a vote, a hearing or a well-timed amendment.
Even if no one hands them a literal “secret,” they operate in an information environment no private investor can access: closed-door briefings, early views of legislative text, and constant contact with agencies and industry.
Then we let them trade. Of course the public is cynical.
A recent occurrence shows why it has a right to be, even without proof of illegality. Public disclosures show Rep. Debbie Wasserman Schultz bought shares of Viasat in October 2024. In December of the same year, the company announced a five-year federal contract with the General Services Administration, with a ceiling value of $568 million, to support U.S. defense communications and cybersecurity needs.
Ms. Wasserman Schultz is a senior appropriator — a ranking member on the military construction, veterans affairs and related agencies subcommittee, helping steer billions of dollars in military construction and veterans funding.
Maybe that trade was a coincidence. Maybe it was good research. Or maybe it was blind luck. The problem is that Americans shouldn’t have to wonder.
Every time a lawmaker buys a defense stock before a contract headline, an energy stock before a regulatory shift, or a tech stock before an antitrust hearing, the damage to trust is immediate. The appearance of a conflict is enough to make citizens conclude the system is for insiders.
Supporters of the status quo point to the STOCK Act, passed in 2012. Yes, Congress must disclose trades, but the law is a transparency Band-Aid on a conflict-of-interest wound.
Lawmakers can report trades up to 45 days after the fact — an eternity in modern markets. When they miss deadlines, the penalty can be as little as $200. That’s not a deterrent; it’s barely a parking ticket for someone making five to seven figures on a trade.
If Congress wants voters to believe it works for them, not members’ portfolios, then the fix is straightforward. Bipartisan proposals to ban congressional stock trading have been introduced in both chambers. Leadership should stop treating them as messaging bills and bring them to the floor.
Limit members from owning or trading individual stocks while in office. Allow broad, diversified investments — index funds, mutual funds, U.S. Treasurys — so lawmakers can invest without picking winners and losers. Public service should not require poverty, but it should require a clean separation between legislating and stock picking.
Require blind trusts or divestment with real enforcement. If lawmakers insist on holding individual equities, then place them in a qualified blind trust run independently, with no communication or control.
Raise the cost of breaking the rules. Tie penalties to the size of the transaction, require forfeiture of profits, and create an enforcement process that doesn’t depend on Congress policing itself.
A trading desk doesn’t belong in Congress. The people who set the rules should not be allowed to profit from them in real time. If lawmakers want the public’s trust, then they can start by proving they’re in Washington to serve, not to trade.
• Michael Carbonara is the founder and former CEO of Ibanera and a Republican candidate for the House of Representatives in Florida’s 25th Congressional District.
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