For years, I have resisted the calls for banning members of Congress from trading individual stocks. I was even more certain of my position when in 2012 Congress passed the Stop Trading on Congressional Knowledge (STOCK) Act, which explicitly prohibits members of Congress and their staff from using material, non-public information gained from their official positions for financial gain.

I was wrong.

In my profession, I am legally barred from making investment decisions based on “material, non-public information,” so I assumed that a similar prohibition for members of Congress would be sufficient.

You can’t legislate morality, but you can encourage ethical behavior—even among people who at their core may be unethical—by legally prohibiting specific acts. But if the law has no teeth, it is useless. The ethical man needs no law prohibiting unethical behavior. And the unethical man will simply ignore it.

Consider the results. According to 2025 data compiled by Unusual Whales, about 70 members of congress actively traded stocks last year. Of those, 38 (or roughly 54%) beat the S&P 500. For comparison, only 27% of professional, large cap U.S. mutual funds beat the S&P 500 in 2025. These are supposedly full-time legislators. How are they producing this incredible performance?

Investment outperformance by some members of Congress is so well-known that it has become a running joke. (You know the joke. It involves Nancy Pelosi.) In 2025 alone, over 75 members of Congress and nearly 200 senior congressional staffers violated the STOCK Act. The penalty? A whopping $200 fine – less than the cost of a Wagyu Tomahawk steak at the Four Seasons in Georgetown.

If members of Congress insist on being able to trade individual stocks, the STOCK Act must be amended or rewritten. An independent watchdog with prosecutorial power should be responsible for monitoring compliance with the Act. Penalties for first-time violations should be financially substantial and only payable with personal funds. Penalties for repeat offenders should trigger additional consequences, including significant restrictions on the member’s access to information, such as removal from all committee assignments. Rather than waiting 45 days following a trade to (maybe) disclose the information, Congress should be required to file disclosures of intent to buy or sell any stock – 45 days prior to making the trade. If someone thinks that restriction is unfair, there is an easy solution called “index funds.”

The annual pay of a U.S. Congressman is $170,000. The average mutual fund manager makes closer to $2 million. If Congress is truly full of part-time Warren Buffetts, why haven’t they left public office to start their own funds?

David Moon is president of Moon Capital Management. A version of this piece originally appeared in the USA TODAY NETWORK.