Aug 27, 2025
A U.S. Senate committee has voted to advance a bill aimed at banning federal lawmakers, presidents and vice presidents from trading individual stocks.
The move comes after years of outrage over potential conflicts of interest on Capitol Hill, where some members of Congress appear to have made timely trades ahead of market-moving events.
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But while supporters call it a long-overdue accountability measure, the bill is already facing pushback, including from the White House.
Here’s what exactly is in the PELOSI Act — renamed to the HONEST Act — and why it’s controversial. Plus, how stock trading among politicians could be impacting your 401(k) without you realizing it.
What's in the act, and why is it making headlines now?
Originally named as a dig against Democrat Rep. Nancy Pelosi for her husband’s heavy stock trading, Republican Sen. Josh Hawley’s proposed PELOSI (Preventing Elected Leaders from Owning Securities and Investments) Act would ban trading for lawmakers, along with their spouses and dependents. While there is no evidence that Pelosi had insider information that influenced her husband’s trading, Hawley has stood fast that it’s too risky for any congressional member to be involved in stocks.
“We have an opportunity here today to do something that the public has wanted us to do for decades, and that is to ban members of Congress from profiting on information that, frankly, only members of Congress have,” Hawley said during a Homeland Security and Governmental Affairs Committee hearing on July 30.
Notably, Pelosi herself has thrown her support behind the act.
“We must have strong transparency, robust accountability and tough enforcement for financial conduct in office because the American people deserve confidence that their elected leaders are serving the public interest — not their personal portfolios,” she said in a statement. “If legislation is advanced to help restore trust in government and ensure that those in power are held to the highest ethical standards, then I am proud to support it — no matter what they decide to name it.”
The bill originally focused on banning members of Congress from trading, but was altered to change the contentious name to the HONEST (Halting Ownership and Non-Ethical Stock Transactions) Act and expand its reach to the White House. President Donald Trump and Vice President JD Vance would be exempt, but all future administrations would be subject to enforcement.
The bipartisan bill was advanced by the committee, but not after criticism from Hawley’s fellow Republicans, who claim the bill was unnecessarily strict, since the STOCK (Stop Trading on Congressional Knowledge) Act already prohibits lawmakers and their spouses and dependents from trading on material, nonpublic information. The STOCK Act also requires transparency and public disclosure on many transactions.
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“I don’t know when in this country it became a negative to make money,” Republican Sen. Rick Scott said at the hearing. “How many of you don’t want to make money? Anybody want to be poor?”
Trump later offered his own scathing rebuke, calling Hawley a “pawn” and a “second-tier” senator in a post on Truth Social. He also complained that Hawley had sided with Democrats to block a review of stock trading by Pelosi and her family.
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The dangers of congressional insider trading
Insider trading can pose serious risks to the security of average American investors, especially if elected leaders use privileged knowledge to enrich themselves.
If lawmakers gain insider information before trading, the fear is they might use it to not only influence policy, but that decisions will influence the market. For instance, a lawmaker who knows a coal restriction bill is about to pass might suddenly sell his shares in energy companies. This puts the everyday individual investor at a disadvantage, potentially leading to poorer stock decisions or unexpected losses.
Your retirement account may be especially vulnerable to insider trading moves. Suppose your account is part of a large pension fund. In that case, you may be invested in industry-based stocks, which may be highly sensitive to insider trading if they’re subject to new laws affecting entire market sectors.
The same goes for 401(k)s or IRAs that use mutual funds or exchange-traded funds that invest in large market sectors influenced by legislation related to health care, technology, utilities or energy. Insider trading scandals can cause portfolio volatility, which is why it’s important to implement a lasting solution to prevent long-term underperformance.
Correction, Aug. 27, 2025: This story has been updated to to reflect that the bill originally focused on lawmakers and was amended to include future presidents and vice presidents.
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Chris Clark is a Kansas City–based freelance contributor for Moneywise, where he writes about the real financial choices facing everyday Americans—from saving for retirement to navigating housing and debt.
