Bill Would Ban Fed Officials from Buying, Selling Stocks Amid Recent Reports of Possible Conflicted Trading; Legislation Builds on Brown Bill to Ban Members of Congress from Trading Individual Stocks
WASHINGTON, D.C. – Today, U.S. Sen. Sherrod Brown (D-OH), Chairman of the U.S. Senate Committee on Banking, Housing, and Urban Affairs, and U.S. Sens. Kirsten Gillibrand (D-NY), Jeff Merkley (D-OR), and Raphael Warnock (D-GA) introduced the Ban Conflicted Trading at the Fed Act, legislation to prohibit Federal Reserve officials from trading individual stocks and ensure Americans can trust that the Federal Reserve is acting in the best interest of all Americans. Brown does not own individual stocks and has introduced legislation to prohibit Members of Congress from trading individual stocks.
“Public officials, whether at the Fed or in Congress, must serve the American people – not their own stock portfolios,” said Sen. Brown. “Our bill will ensure that Fed officials cannot buy and trade stocks, and there will be financial penalties if they don’t comply. The American people need to be able to trust that the Federal Reserve works for them, and that officials aren’t abusing their positions for personal gain.”
Senator Brown first previewed this legislation at a Banking, Housing, and Urban Affairs Committee hearing in September, shortly after learning of stock trades made by two Federal Reserve Bank Presidents. The bill would build on legislation Brown has introduced that would prohibit Members of Congress from abusing their public positions for personal financial gain by buying and selling individual stocks, or serving on public boards.
Specifically, The Ban Conflicted Trading at the Fed Act would strengthen and clarify the ethics requirements at the highest levels of the Federal Reserve System. It would make sure that Fed officials never have a leg up on investing over hard-working Americans. The bill would also:
- Prohibit Federal Reserve Board Governors and Reserve Bank Presidents and Vice Presidents from trading individual stocks. Officials could invest in diversified mutual funds, investment trusts, and U.S. treasuries.
- Federal Reserve officials would have six months to divest individual holdings after enactment of the bill, or if received by gift or inheritance. They could also hold existing investments while in office, or transfer them to a blind trust.
- Federal Reserve officials would be subject to substantial fines if they fail to comply with the ban or other requirements.
- Reserve Bank Presidents, Vice Presidents, and Directors would be required to make the same public annual and periodic financial disclosures as Federal Reserve Governors, and would also be subject to the same penalties for violation of these requirements.
The text of the legislation is available here and a summary is available here.