Efforts to stop insider trading in Congress divide LI delegation

WASHINGTON — A move to bar members of Congress and their families from purchasing stocks is stirring debate among Long Island's House delegation, as competing bills aimed at preventing insider trading circulate on Capitol Hill.

The Republican-backed "Stop Insider Trading Act," co-sponsored by Rep. Nick LaLota (R-Amityville), passed the House in a 232-198 vote on Wednesday, with 13 Democrats crossing party lines to endorse the measure.

But Reps. Tom Suozzi (D-Glen Cove) and Laura Gillen (D-Rockville Centre) voted against the measure, arguing that it does not go as far as other bipartisan proposals in the House and Senate, while also taking issue with Republicans adding voter ID provisions to the bill. Those provisions, backed by President Donald Trump, are unrelated to lawmakers' stock trading.

But their votes, ahead of the November midterms, and just before the House adjourned Thursday for a monthlong summer recess, have put the two Democrats in the crosshairs of national Republicans who have publicly criticized the no votes.

"Using opposition to commonsense election integrity measures as an excuse to protect your personal bottom line shows how out of touch Democrats are and that they’ll take any opportunity to cheat for their own gain," Republican National Committee spokeswoman Kristen Cianci wrote in a statement to Newsday.

Suozzi, who has faced complaints lodged by watchdog groups over delays in reporting his stock transactions, told Newsday in a brief phone interview Friday that he did not support the Republican-led bill because he is a co-sponsor of another bipartisan bill — the Restore Trust in Congress Act.

He said that one would go further in preventing insider trading by barring members of Congress, their spouses and dependents from buying, selling or owning individual stocks, securities, commodities and futures.

Bipartisan bill

The bill is co-sponsored by Sen. Kirsten Gillibrand (D-N.Y.) in the Senate, but despite having a Republican lead sponsor in the Senate — Sen. Ashley Moody (R-Fla.) — and 35 Republican co-sponsors in the House, it has failed to be put up for a vote.

"This is typical, phony Washington gotcha game-playing," Suozzi said. "There are serious, bipartisan bills that I am a co-sponsor of to actually clean up Congress. They ignored those bipartisan and stronger bills, and put up a watered-down version with unrelated poison pills related to the SAVE Act."

Gillen, in a statement, argued that the bill that passed Wednesday does not go far enough to stop potential insider trading among lawmakers, saying she supports "banning Members of Congress from trading stocks" altogether.

"Despite its misleading title, this bill does not actually ban members’ stock trading outright and is riddled with loopholes that would still allow them to buy cryptocurrency, mutual funds, and commodities," Gillen said in a statement. "It leaves the door open for members to own and sell stocks in industries they directly regulate and use nonpublic information for personal gain."

LaLota, in a video posted to his X account, described the bill as "an important step moving forward," and Rep. Andrew Garbarino (R-Bayport) who also voted for the measure, called it online "a commonsense step to prevent conflicts of interest, increase transparency, and strengthen public trust in government.

"You at home should not be worried about what members of Congress are doing with the information we are privy to," LaLota said. "We are privy to some pretty sensitive information that if used could benefit us personally, and that should not happen."

LaLota’s office did not immediately return a request for comment Friday on whether the bill goes as far as the other measures that have not been put up for a vote.

Possible loophole?

The Campaign Legal Center, a nonpartisan government ethics watchdog, has said the bill passed last Wednesday is flawed because it still permits lawmakers to sell stocks in their possession, noting that lawmakers privy to sensitive information could easily use that information to unload stocks before their value drops.

The bill "would not have prevented a lawmaker from selling over $1 million in assets approximately one week before the COVID-19 pandemic hit the U.S., even though they may have had nonpublic information about the looming health emergency and its negative impact on the stock market," the center wrote in its analysis of the bill.

In 2020, four senators were found to have sold hundreds of thousands of dollars worth of stocks just after receiving a closed-door briefing from federal officials about the potential for a coronavirus outbreak in the United States, weeks before the first documented cases emerged.

While the Stop Insider Trading Act has passed in the House, it faces major hurdles in the Senate, where it needs 60 votes to pass. Democrats and a handful of Republicans have raised concerns about the voter ID provisions in the bill, as Trump presses Congress to pass the "Save America Act" with stricter ID requirements to prove citizenship.

The bill is the latest instance of lawmakers including unrelated or controversial provisions in a bill aimed at dissuading the minority party from voting for what otherwise appears to be straightforward legislation.

Rep. Thomas Massie (R-Ky.) chided his own party for including the voter-ID provisions, arguing that Republican leaders knew that doing so would keep Democrats from voting in favor.

"Congress is not serious," Massie wrote in a social media post on the day of the vote. "We are voting on a stock trading ban for members of Congress ... BUT Republicans added voter-ID in the legislation. Not to get Dems to vote for voter-ID, but to get them to vote against the stock trading ban, so they can use it in the [November] election."  

By Laura Figueroa Hernandez

laura.figueroa@newsday.com@Laura_Figueroa

Laura Figueroa Hernandez is the White House correspondent and previously covered New York City politics and government. She joined Newsday in 2012 after covering state and local politics for The Miami Herald.