Susan Collins’ stock law with ‘no teeth’ is under attack from both parties

The pressure intensified last week when U.S. Reps. Maggie Goodlander, D-New Hampshire, and Brian Fitzpatrick, R-Pennsylvania, announced a bipartisan proposal to ban stock trading and prediction market betting for members of Congress, the executive branch and the U.S. Supreme Court.

“No member of Congress has ever been prosecuted under the STOCK Act,” they noted in announcing the bill.

As the race between Collins and Democrat Graham Platner becomes central to the fight for Senate control, the STOCK Act increasingly faces criticism. Collins helped write the law alongside the late U.S. Sen. Joe Lieberman, D-Connecticut. It passed with overwhelming bipartisan support and was signed in 2012 by then-President Barack Obama.

The act bans lawmakers from trading stocks based on information obtained through their official roles and imposes a 45-day deadline for reporting trades. But its $200 violation penalties, often waived by ethics committees, have long been criticized as weak.

Collins has resisted the push for tougher legislation, arguing existing laws must be more strictly enforced. She acknowledged a violation of the STOCK Act earlier this year, citing a five-day delay in disclosing a purchase of up to $50,000 in Pfizer corporate bonds by a third-party manager of her husband’s investments.

The Maine senator is far from alone. Almost 80 lawmakers and nearly 200 staffers violated the act’s reporting requirements in recent years, according to Business Insider, and more than 20 lawmakers were found in violation since last summer, NOTUS reported. The senator’s team notes she has never bought, sold or owned any individual shares of stock.

“The good thing about the STOCK Act is it did provide the public with a clearer picture of how often lawmakers engage in suspicious stock trading,” Kedric Payne, a lawyer at the Campaign Legal Center, a left-leaning watchdog group, said. “Everything else is a downside. You cannot solve the problem of suspicious stock trading with disclosure alone. You need something that stops that trading.”

Goodlander’s and Fitzpatrick’s proposal would require violators to forfeit any trade profits and pay a fine of 10% of the investment’s value. In January, a group of House Republicans introduced a more limited proposal with higher penalties and quicker reporting deadlines, noting that “many Americans have become concerned that the STOCK Act is insufficient and stronger measures must be implemented.”

“The STOCK Act was a small step in the right direction, but realistically it has no teeth,” said Ross Marchand, executive director of the right-leaning Taxpayers Protection Alliance. “Something more significant and more comprehensive is needed to end this massive problem of congressional insider trading.”

Platner, an oyster farmer and military veteran, won the Democratic nomination on a populist message of taking on money in politics. He has recently painted Collins as corrupt, alleging she used her office to benefit her husband’s former lobbying and consulting firm. A Bangor Daily News analysis from 2020 found no direct link between her actions and his business.

Collins’ campaign has said no individual stocks have been bought or sold from her husband’s account in more than three years. The senator called Platner’s allegations “outrageous and false” in a post on X Thursday night. 

“If Graham Platner wants to debate policy, I look forward to that conversation,” she said. “But making reckless and defamatory accusations because you cannot defend your own record is beneath the people of Maine.”

On Thursday, Platner released what he called an anti-corruption plan, including a proposal to ban members of Congress from trading individual stocks and increase penalties for STOCK Act violations, with prosecution and imprisonment “on the table.” 

Blake Kernen, a spokesperson for the senator’s office, said the STOCK Act is just one piece of a broader system including Senate ethics rules and bipartisan oversight by the Senate Ethics Committee.

“This law eliminates any ambiguity that lawmakers are covered by existing laws on insider trading,” she said. “It also requires regular public disclosures of stock transactions, which allows for public scrutiny and media oversight.”

She added that Collins believes members of Congress “should not be allowed to buy or sell individual stocks unless the stock portfolio is managed by an outside advisor who makes the decisions independently and without consultation with the member.”

The Restore Trust in Congress Act, backed by nearly 140 bipartisan House cosponsors, goes further than most other measures — requiring lawmakers to divest existing individual stock holdings, leaving only widely held mutual funds, exchange-traded funds, U.S. Treasury bonds and precious metals.

Independent Sen. Angus King was a cosponsor of the ETHICS Act, which aims to ban congressional trading and requires either divestment or placing holdings in a blind trust.

Democratic U.S. Rep. Chellie Pingree, who said a paperwork error led to a STOCK Act violation last year, has also backed bills to limit or ban stock trading. And U.S. Rep. Jared Golden has also strongly supported stock trading bans for lawmakers and executive branch officials.

U.S. Sen. Kirsten Gillibrand, D-New York, who helped pass the STOCK Act but has since pushed for trading bans, said the bill’s disclosure rules were meant to spur Securities and Exchange Commission or Justice Department investigations.

“Those investigations have not really happened,” she told NY1 earlier this year. “There’s been few and far between investigations of insider trading.”