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Congress scraps proposals to ban politicians from trading defense stocks

Congress scraps proposals to ban politicians from trading defense stocks

On December 6, House and Senate lawmakers unveiled the text for an $886 billion defense bill, marking a crucial step towards its passage by year-end. 

Notably, contentious provisions pertaining to abortion and transgender care for service members were jettisoned, fostering bipartisan agreement. 

Among other things, the lawmakers also decided to abandon proposals banning politicians from trading stock in defense contractors, as highlighted by Quiver Quantitative on December 7, raising concerns about potential conflicts of interest regarding congressional trading. 

Over 70 Congress members own defense stocks

Quiver Quantitative, an alternative trading data platform that meticulously tracks Congressional trading activity, revealed that Congress scrapped proposals to prohibit politicians from trading stock in defense contractors in its $886 billion defense and national security policy bill.

“Congress has released text for the $886B defense bill. Proposals to ban politicians from trading stock in defense contractors were scrapped.”

– the X account wrote in its post.

“Many of the politicians who vote on the defense budget also seek personal profit from defense spending.”

– it added.

According to its findings, 32 Congress members hold stock in Lockheed Martin (NYSE: LMT), the world’s largest contractor based on revenue from defense.

Additionally, 21 Congressmen invested in RTX Corporation (NYSE: RTX), the second-biggest defense contractor, and 20 own shares in General Dynamics (NYSE: GD). 

Suspicious Congressional stock trades in defense companies

Quiver Quantitative also noted several suspicious trades by US politicians in defense-related stocks

For instance, Representative John Rutherford purchased RTX shares on the same day that Russia invaded Ukraine in 2022. 

Similarly, Representative Kevin Hern bought, sold, and repurchased LMT shares over the course of a few months. 

What’s particularly interesting is that many Congress members who have been trading defense stocks also sit on committees in charge of overseeing the Department of Defense. 

Also, dozens of US representatives violated the STOCK Act dozens of times – a federal law aimed at preventing insider trading by members of Congress and government officials by requiring them to disclose their financial transactions in a timely manner.

Only a few have been investigated for these breaches, according to Quiver Quantitative.

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