Conflict of Interest in the Capital: Curbing Insider Trading Among Lawmakers
At the heart of the American Dream is the promise of upward mobility and financial security. Politicians are among the group of Americans who have achieved this dream. Congresspeople commonly have a net worth that far exceeds the salary of their position multiplied by the number of years they have held it. If not from salary, where does this wealth come from? The answer is insider trading, an illegal and morally questionable process of using non-public information to profit from the stock market (Investor 2025). Though illegal, the enforcement of insider trading is spotty. The prevalence of insider trading in Washington, D.C., and its lack of enforcement undermine the efforts of the American public, who have earned their income and must trade in the stock market using only publicly available information.
In comparison to other major news events, the issue of insider trading may seem insignificant, but this doesn’t mean it should be overlooked. According to Investor, insider trading is “buying or selling a security, in breach of a fiduciary duty or other relationship of trust and confidence, based on material, nonpublic information about the security” (Investor 2025), and it ruins the integrity of the stock market. Insider trading is comparable to someone from the future travelling through time and betting on a sports game that has already taken place, profiting from their knowledge of its outcome. In that case, there is no upper limit to what they can safely bet on that game. Insider trading undermines the public's effort to make a profit from the stock market and essentially removes any risk of financial loss. Defined by the US Securities and Exchange Commission (SEC), an insider is “an officer, director, 10% stockholder, and anyone who possesses inside information because of his or her relationship with the Company or with an officer, director, or principal stockholder of the Company” (SEC 2015). From this definition, it is just as illegal for someone with close relations to a principal stockholder of a company to trade using non-public information as it is for that stockholder to do so. The problem that faces Washington is that politicians likely obtain information from what the SEC would consider “insiders,” allowing them to make more money than the public can.
The theory that lawmakers have used non-public information to turn an illegal profit from the stock market isn’t just an Internet accusation that holds no weight. Congresspeople have been accused of this crime numerous times, and some have been prosecuted and found guilty. For example, Chris Collins, a member of the U.S. House of Representatives, was sentenced to 26 months in prison after tipping off his son using insider information (Breuninger 2020). In June 2017, Collins learned that a drug developed by an Australian biotech firm, which was being used to treat multiple sclerosis, had performed poorly in clinical trials. After obtaining this information before it was made public, Collins called his son, who, along with his wife and other family members, had sold their shares in Innate Immunotherapeutics, the firm that had produced the drug (Breuninger 2020). After the results of the clinical trials were disclosed to the public, the price of one share of Innate dropped by 92 percent, saving Chris Collins and several members of his family from a significant loss. Fast forward to January 2020, and Chris Collins was sentenced to 26 months in prison for conspiracy to commit securities fraud and was also ordered to pay a $200,000 fine (Breuninger 2020).
Another example of insider trading in Washington is the conviction of Steve Buyer, a U.S. House of Representatives member from Indiana. In 2018, Buyer was involved in two separate insider trading schemes, placing profitable securities trades based on stolen information obtained from consulting work (Department of Justice 2023). In March and April 2018, Buyer purchased shares of Sprint Corporation before it merged with T-Mobile on April 29, 2018, in a deal valued at $26.5 billion (Department of Justice 2023). Later, from June to August 2019, he participated in the trading of Navigant Consulting shares, which were acquired by the consulting and advisory firm Guidehouse. In the trading of Sprint shares, the Buyer made $126,000, and in the trading of Navigant shares, the Buyer made a profit of $223,000, all of which was made illegally (Department of Justice 2023).
The primary question is whether Congress has an insider trading problem, and if so, how can it be halted? Unfortunately, the two previous examples of insider trading are far from outliers. The statistics regarding the U.S. Lawmakers’ investing portfolios performances are damning: “A recent report by Unusual Whales, a platform that tracks stock disclosures from lawmakers, found that at least 20 members of Congress had returns that were greater than the S&P 500, and that at least five had returns of over 100%, with an additional two members earning a return of more than 95%” (Williams 2025). Outperforming the S&P 500, a stock index that tracks 500 of the largest corporations, is enviable and difficult to achieve. Outperforming the S&P 500 is rare and essentially unheard of for a non-professional investor. All signs point to the abuse of non-public information, which is also being perpetrated by a group of people who “earn $174,000 annually, nearly three times the salary of the average American, they are provided with a sizable per diem for lodging and meals during their travels across the nation and abroad, they have the best health insurance that money can buy, and many will eventually benefit from a solid pension” (Williams 2025). Insider trading by Congresspeople is disheartening because of the principles that elected officials are purported to uphold, and regardless of its legality, it demonstrates an abuse of power. In addition to the benefits of working in Congress, the American people cannot invest effectively because they lack access to the specialized knowledge that Congresspeople possess. It is unfair to those pursuing the American dream to continue looking the other way on insider trading in Washington, D.C.
So what can be done? In most instances of illegal activity, the solution is to pass legislation that prevents further crimes from being committed. In this case, that’s part of the solution, as a bill called the “Restore Trust in Congress Act” has been introduced in the House of Representatives, banning members of Congress from owning individual stocks and from insider trading (George Whitesides 2025). This proposed legislation is a step in the right direction. Allowing members of Congress to hold individual securities is more dangerous than allowing them to trade mutual funds or ETFs (exchange-traded funds). Investing in the S&P 500 as a whole does not allow for insider trading in the way that trading individual stocks does. Insider information is more useful when it pertains to individual stocks. But the lack of specificity in phrasing, demonstrated in the bill’s wording “banning members from insider trading,” is problematic. Members of Congress are already not allowed to engage in insider trading. Passing more legislation that prohibits an activity already deemed illegal is futile. The problem is in the enforcement. The SEC has already demonstrated in the Chris Collins and Steve Buyer cases that it has the ability to step in and crack down on insider trading. However, the profits of other Congresspeople in the stock market suggest that insider trading in Washington is much larger than that of just Collins and Buyer. The key to solving the insider trading issue does not lie in the legislation, but rather in the enforcement. There would be no need for the “Restore Trust in Congress Act” if there were greater enforcement of anti-insider trading laws. The solution to the problem lies in the SEC’s desire to crack down on insider trading, not the House of Representatives’ ability to pass new legislation.
Congresspeople and their prolific trading undermine public confidence in the stock market and the integrity of the government. The cases of Chris Collins and Steve Buyer exemplify how serious breaches of trust can occur when public officials abuse private information for personal gain. Meanwhile, the investment activity of many members of Congress continues to raise questions about transparency in public service. Ultimately, the solution does not lie solely in drafting new legislation but in ensuring that existing insider trading laws are enforced. Strong, consistent enforcement sends a clear message that no one is above the law, and it is this commitment to transparency that will restore trust in government institutions.
References
“Former Congressman Sentenced to 22 Months in Prison for Insider Trading.” Southern District of New York | Former Congressman Sentenced To 22 Months In Prison For Insider Trading | United States Department of Justice, September 19, 2023. https://www.justice.gov/usao-sdny/pr/former-congressman-sentenced-22-months-prison-insider-trading.
“Insider Trading.” Insider Trading | Investor.gov. Accessed October 18, 2025. https://www.investor.gov/introduction-investing/investing-basics/glossary/insider-trading.
KevinWilliamB. “Ex-New York Congressman Chris Collins Sentenced to 26 Months for Insider-Trading Tip to Son.” CNBC, January 18, 2020. https://www.cnbc.com/2020/01/17/chris-collins-sentenced-to-26-months-for-insider-trading-tip.html.
“Rep. George Whitesides Leads Way to Legislation to Ban Members of Congress from Trading Stocks.” Representative George Whitesides, September 8, 2025. https://whitesides.house.gov/media/press-releases/rep-george-whitesides-leads-way-legislation-ban-members-congress-trading.
Sec.gov. Accessed October 18, 2025. https://www.sec.gov/Archives/edgar/data/1164964/000101968715004168/globalfuture_8k-ex9904.htm.
Williams, Armstrong. “The Insider Trading Game on Capitol Hill Must Stop.” KOMO, January 14, 2025. https://komonews.com/news/armstrong-army-strong/the-insider-trading-game-on-capitol-hill-must-stop.