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It was one of the few moments in last month’s State of the Union address that earned applause from Democrats: President Donald Trump’s call to pass a bill marketed as stopping lawmakers from engaging in insider trading.

“They stood up for that. I can’t believe it. I can’t believe it,” Trump said last Tuesday evening at the Capitol, glancing at the Democrats. He then turned to his own party. “I wasn’t sure if anybody even on this side was going to applaud for that.”

The Stop Insider Trading Act—whom Trump urged Congress to pass “without delay”—has a critical flaw: it doesn’t actually live up to its name. The legislation, backed by many Republicans over stronger proposals, is riddled with loopholes that let lawmakers still profit from insider information as long as those gains are moved into other assets like bonds, commodities, crypto, or mutual funds. 

“The title suggests it’s a ban on members of Congress owning stocks,” Rep. Joe Morelle tells me. “But it doesn’t do that. Not at all.”

The New York representative is the ranking Democrat on the committee that sets rules for House employees—and as a result, he understands the inner workings of Capitol Hill better than most. “This is what I’d call an Orwellian description of a bill—one Republicans have pushed to distract people.”

Though the bill prohibits lawmakers, their spouses, and dependent children from buying publicly traded stocks, they can keep existing holdings and even sell them with seven days’ notice. And if current assets generate dividends, lawmakers can automatically reinvest those payments in the same company, expanding their stake.

The bill also includes an unusual loophole: lawmakers can purchase any stocks they choose for their parents, under the premise that these would become part of their inheritance. 

It also does nothing to address other government branches—specifically the White House and Supreme Court—where alleged self-dealing erodes the already dwindling trust in public officials.

The bill Trump is endorsing also permits lawmakers to craft policies that boost the value of stocks already in their portfolios. In recent years, Congress has faced major criticism for actions that significantly affected their personal savings—like during the 2020 Covid pandemic and 2023 banking crisis. Additionally, the bill doesn’t prevent lawmakers or their families from investing in private firms like SpaceX or OpenAI.

Morelle isn’t alone in spotting this bait-and-switch. Good-government groups like CREW, the Project on Government Oversight, the Campaign Legal Center, and Public Citizen have all written to lawmakers urging them to back alternative legislation, such as the Restore Trust in Congress Act. That bill would ban all asset trading not just for lawmakers, but also for the President, Vice President, Cabinet members, and Supreme Court justices. Those covered by the measure could still hold assets in qualified blind trusts.

“You’d have to divest everything,” Morelle says. 

A procedural move to bring that legislation to the floor—despite House Speaker Mike Johnson’s opposition—already has 185 signatures (all from Democrats) and is still 33 short of the 218 needed to force a vote. 

A similar bill last year garnered 93 co-sponsors—77 Democrats and 17 Republicans—but never received a vote.

Of course, even if Congress somehow passed this stronger ethics bill, Trump would likely veto it—he’s made it clear he won’t support a measure that limits his own investing.

But this issue is a no-brainer for lawmakers in polls—they’re weary of being viewed as self-serving greedsters. There’s clearly some desire for action, given the numerous stories of lawmakers evading disclosures under a 2012 transparency law with trivial penalties. Rep. Lisa McClain of Michigan, the fourth-highest-ranking House Republican, was late reporting over 500 trades valued at least $1.5 million. Meanwhile, Republican Sen. Markwayne Mullin of Oklahoma reported millions in trades more than a year after they happened.

Rep. Bryan Steil, a Wisconsin Republican who chairs the Committee on House Administration and acts as the House’s de facto “mayor” of Capitol Hill, introduced the Stop Insider Trading Act in January. “The American people deserve to know their member of Congress isn’t profiting from insider information,” Steil stated. “If you want to trade stocks, go to Wall Street—not Capitol Hill.”

That’s strong rhetoric. But the details are key—especially since about half of Congress already holds stocks.

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