Jefferson Shreve’s Stock Trading Under Scrutiny: Legal Frameworks for Accountability

(Bill Clark/CQ Roll Call via AP Images)

Jefferson Shreve, the U.S. Representative from Indiana’s 6th Congressional District, has drawn attention for his extensive stock trading activity since taking office in January 2025. Reports indicate that Shreve executed over 140 stock trades valued between $3.44 million and $9.45 million from April 7 to April 17, 2025, including transactions in companies like Uber, Schneider National, and CSX, which fall under the purview of his role on the House Transportation and Infrastructure Committee. While Shreve’s office maintains that a financial advisor manages these trades to ensure compliance with federal laws, the volume and timing of these transactions—coinciding with market fluctuations following tariff announcements—have raised questions about potential insider trading. Below, we explore the legal frameworks that prohibit insider trading by lawmakers and how they could be used to hold Shreve accountable if evidence of misconduct emerges.

Shreve’s Trading Activity: Context and Concerns

Shreve, one of Congress’s wealthiest members, has been notably active in the stock market, with trades spanning sectors like technology, healthcare, and transportation. For example, on April 7, 2025, he bought and sold shares in companies such as The TJX Companies, PayPal Holdings, and Halliburton, with each transaction valued between $15,001 and $50,000. These trades occurred shortly after President Donald Trump’s tariff announcements in early April, which caused market volatility, prompting scrutiny over whether Shreve leveraged nonpublic information gained through his congressional role. While there is no public evidence confirming insider trading, the scale of his trading and his committee assignments raise ethical and legal questions, especially in light of growing bipartisan calls to restrict congressional stock trading.

Legal Frameworks Governing Insider Trading by Lawmakers

Several laws and regulations establish the boundaries for lawmakers’ financial activities, explicitly prohibiting insider trading and mandating transparency. These frameworks could be applied to investigate and hold Shreve accountable if evidence suggests he violated insider trading laws.

1. Securities Exchange Act of 1934 (Section 10(b) and Rule 10b-5)

   
   

   The Securities Exchange Act of 1934 is the cornerstone of federal securities law, applying to all individuals, including members of Congress. Section 10(b) and SEC Rule 10b-5 prohibit trading securities based on material, nonpublic information in breach of a fiduciary duty or relationship of trust. For Shreve, this means that trading stocks based on confidential information obtained through his role on the House Transportation and Infrastructure Committee—such as upcoming legislation or regulatory decisions affecting transportation companies—would constitute a violation. The Securities and Exchange Commission (SEC) could investigate Shreve’s trades if there’s evidence he accessed and acted on nonpublic information. Proving such a violation requires demonstrating intent and access to material information, which can be challenging but not impossible with detailed trading records and committee activity logs.

2. STOCK Act (Stop Trading on Congressional Knowledge Act of 2012)

   
   

   Enacted to address concerns about congressional insider trading, the STOCK Act explicitly clarifies that lawmakers are subject to the same insider trading prohibitions as the general public. It prohibits trading on material, nonpublic information obtained through official duties and requires members of Congress to disclose securities transactions within 45 days via Periodic Transaction Reports (PTRs). Shreve’s reported trades, disclosed on May 8, 2025, comply with the STOCK Act’s reporting requirements, but the law also serves as a mechanism for scrutiny. If investigators find that Shreve’s trades were based on nonpublic information from his committee work, the SEC or Department of Justice (DOJ) could pursue civil or criminal penalties. Additionally, failure to disclose trades accurately or on time could result in fines or House Ethics Committee sanctions.

3. House Ethics Rules

   
   

   The House Ethics Manual outlines standards of conduct for members, emphasizing that lawmakers must avoid conflicts of interest and refrain from using their positions for personal financial gain. Trading stocks in industries overseen by one’s committee assignments, as Shreve has done, could raise red flags under these rules. The House Ethics Committee could investigate whether Shreve’s trades violated these standards, particularly if they appear to exploit nonpublic information. Violations could lead to disciplinary actions, such as censure or fines, though the committee’s enforcement has historically been criticized for leniency.

4. Senate Code of Conduct (Applicable Through Broader Congressional Oversight)

   
   

   While Shreve is a House member, the Senate Code of Conduct sets a parallel standard for senators and informs broader congressional ethics expectations. It prohibits using nonpublic information for personal benefit and requires transparency in financial dealings. If Shreve’s actions were to spark a broader congressional investigation, Senate precedents could guide expectations for accountability, especially as bipartisan efforts like the TRUST in Congress Act push for stricter rules on stock trading.

5. Criminal Statutes (e.g., 18 U.S.C. § 1348)

   
   

   In severe cases, insider trading by lawmakers could trigger criminal charges under securities fraud statutes like 18 U.S.C. § 1348. This law targets schemes to defraud investors, including trading on inside information. If evidence showed Shreve intentionally used nonpublic information for profit, the DOJ could pursue criminal prosecution, though such cases are rare due to the high burden of proof.

   
   

Enforcing Accountability: How These Laws Could Apply to Shreve

To hold Shreve accountable for potential insider trading, regulators and congressional bodies would need to follow a structured process:

• SEC Investigation: The SEC could initiate an inquiry into Shreve’s trades, examining the timing, companies involved, and his access to nonpublic information through his committee role. For instance, trades in transportation-related stocks like Uber or CSX could be scrutinized for links to committee discussions or briefings. The SEC has authority to impose civil penalties, such as fines or disgorgement of profits, if violations are found.

• House Ethics Committee Probe: The House Ethics Committee could investigate whether Shreve’s trading violated House rules or the STOCK Act. This would involve reviewing his financial disclosures, committee activities, and communications to determine if nonpublic information influenced his trades. The committee could recommend sanctions, though its effectiveness depends on political will.

• DOJ Criminal Investigation: If evidence suggests intentional misconduct, the DOJ could pursue criminal charges under securities fraud statutes. This would require clear proof that Shreve knowingly traded on material, nonpublic information, a high bar that often deters prosecution.

• Congressional Oversight and Public Pressure: Bipartisan proposals like the TRUST in Congress Act, which would require lawmakers to place investments in blind trusts, reflect growing public and legislative demand for accountability. Public scrutiny of Shreve’s trades, amplified by media reports, could pressure regulators to act or push Congress to tighten trading restrictions.

  
  

Challenges and Current Status

Proving insider trading is notoriously difficult, as it requires evidence of intent and access to specific nonpublic information. Shreve’s reliance on a financial advisor to manage his trades, as stated by his office, may serve as a defense against allegations of direct involvement. Moreover, the STOCK Act’s disclosure requirements ensure transparency, but enforcement remains inconsistent, with few lawmakers facing penalties for violations. As of now, no formal investigations into Shreve’s trading have been reported, and his compliance with disclosure rules suggests adherence to the STOCK Act’s minimum requirements.

However, the broader context of Shreve’s trades—occurring amid tariff-related market volatility and tied to his committee assignments—fuels skepticism. Congressional Democrats have already called for SEC investigations into potential insider trading linked to tariff announcements, though these efforts focus primarily on President Trump and his allies. Shreve’s trading could fall under similar scrutiny if evidence emerges connecting his transactions to nonpublic information.

Conclusion

Jefferson Shreve’s extensive stock trading as a freshman congressman has spotlighted the legal and ethical boundaries governing lawmakers’ financial activities. The Securities Exchange Act of 1934, the STOCK Act, House Ethics Rules, and potential criminal statutes provide robust mechanisms to investigate and penalize insider trading if evidence of wrongdoing is found. While no allegations against Shreve have been substantiated, the frameworks exist to hold him accountable through SEC investigations, Ethics Committee probes, or DOJ action. As public and bipartisan pressure mounts to curb congressional stock trading, Shreve’s case underscores the need for stronger oversight to ensure lawmakers prioritize public interest over personal gain. For now, his compliance with disclosure requirements keeps him within legal bounds, but continued scrutiny could shift the narrative if new evidence emerges.