Democrats are exploring a new strategy to pressure Donald Trump over his business conflicts of interest, arguing that an insider trading law would make it a crime for him to profit on information he learns as president.

The STOCK Act, adopted in 2012, was designed to restrict insider trading by members of Congress and their staff. But ethics lawyers say it also applies to the president and might extend to private holdings like Trump’s real estate ventures.


Rep. Louise Slaughter of New York, who wrote the law, is having her staff meet with outside experts and Democrats on the House oversight committee this week to study how the law could apply to Trump’s White House. Of particular interest is how Trump might violate the law if he told his children information that they acted on or invited them to participate in a government meeting where they learned something and used the information to make money.

“Donald Trump is not above the law, and I will be working with my colleagues in Congress over the coming weeks and months to ensure this law is enforced as strongly as possible,” Slaughter said, “so we can hold him accountable for any ethical or legal transgressions.”

Trump’s announcement Monday that he would wait until January to reveal how he will separate himself from his business operations heightened concerns that even as his inauguration nears, there is no plan in place to avoid the ethical hazards that his business ties pose.

Late Monday, Trump tweeted that he will leave his businesses to his two adult sons to run with other executives, and there would be no “new deals” while he’s in office. The tweets suggested that Trump will maintain ownership of the company and his daughter Ivanka may be advising him in government.

The STOCK Act is probably one of the things that is giving Trump’s lawyers pause, said Norm Eisen, a former ethics adviser to President Barack Obama. Eisen, other lawyers and even the Office of Government Ethics have said stepping down from corporate management isn’t enough: Trump must also sell his ownership stake.

“As long as he maintains an interest in his businesses, the temptations and opportunities for information to leak back-and-forth between him and his family will be too profound,” Eisen said in an email. “The alternative threatens violation of the STOCK Act and other laws, and so scandal for him, his family, and the country.”

When Trump told the New York Times “the president can’t have a conflict of interest,” he was probably referring to the Ethics in Government Act, which exempts the president, vice president, members of Congress and judges, according to Brett Kappel, an attorney at the law firm Ackerman who specializes in politics and ethics. But the text of the STOCK Act explicitly includes the president.

“It’s a different criminal violation,” Kappel said. “This could be a problem for President Trump.”

The STOCK Act presents a more obvious problem for publicly traded shares that are easy to buy and sell. There has been only one case involving the law, in which the Securities and Exchange Commission alleges a House staffer tipped off a lobbyist to a market-moving decision from the Centers for Medicare and Medicaid Services.

Trump’s financial disclosure report from earlier this year showed some $40 million in publicly traded shares. A spokesman said this week that Trump sold the equities in June but provided no documentation.

The more troublesome question is how the STOCK Act might affect any stake Trump keeps in his real estate business, as it appears to cover anything Trump might do to benefit his private businesses using knowledge he gains as president.

Ironically, by removing himself from business operations of his company but not ownership, as Trump has indicated he plans to do, he makes it more likely his holdings will be treated as securities subject to insider-trading laws, according to Richard Morris, a partner at Herrick Feinstein who specializes in corporate real estate. Companies that Trump exclusively owns and controls probably aren’t securities, but when other people manage them they become investment contracts, which are considered securities.

The Office of Government Ethics, which sets ethics policy for the executive branch, declined to comment. But the office did invoke the STOCK Act in a letter Monday to Sen. Tom Carper of Delaware, the ranking Democrat on the Senate Homeland Security and Governmental Affairs Committee.

“The STOCK Act bars the President from: using nonpublic information for private profit; engaging in insider trading; participating in an initial public offering; intentionally influencing an employment decision or practice of a private entity solely on the basis of partisan political affiliation; and participating in a particular matter directly and predictably affecting the financial interests of any person with whom he has, or is negotiating for, an agreement of future employment or compensation,” the letter said.

OGE has longstanding policy that executive branch employees can’t “engage in a financial transaction" using nonpublic information. That policy doesn’t bind the president, but the office said in the Carper letter that it generally advises presidents to act as if conflicts of interest laws do apply to them.

The precise application and enforcement of the STOCK Act presents a potential conflict of interest for Trump: any violations of the law would be enforced by the Securities and Exchange Commission, whose chairman Trump will appoint, or by prosecutors in the Department of Justice, ultimately answerable to Trump’s attorney general.