II 117TH CONGRESS 1ST SESSION S. 564 To prohibit Members of Congress from purchasing or selling certain investments, and for other purposes. IN THE SENATE OF THE UNITED STATES MARCH 3, 2021 Mr. MERKLEY (for himself, Mr. WARNOCK, and Mr. BROWN) introduced the following bill; which was read twice and referred to the Committee on Homeland Security and Governmental Affairs A BILL To prohibit Members of Congress from purchasing or selling certain investments, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Ban Conflicted Trad- 4 ing Act’’. 5 SEC. 2. DEFINITIONS. 6 In this Act— 7 (1) the term ‘‘commodity’’ has the meaning 8 given the term in section 1a of the Commodity Ex- 9 change Act (7 U.S.C. 1a); 10 VerDate Sep 11 2014 04:03 Apr 01, 2021 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S564.IS S564 pbinns on DSKJLVW7X2PROD with BILLS 2 •S 564 IS (2) the term ‘‘covered investment’’— 1 (A) means investment in a security, a com- 2 modity, or a future, or any comparable eco- 3 nomic interest acquired through synthetic 4 means such as the use of a derivative; and 5 (B) does not include— 6 (i) a widely held investment fund de- 7 scribed in section 102(f)(8) of the Ethics 8 in Government Act of 1978 (5 U.S.C. 9 App.); or 10 (ii) a United States Treasury bill, 11 note, or bond; 12 (3) the term ‘‘covered person’’ means— 13 (A) a sitting Member of Congress; and 14 (B) an individual employed as an officer or 15 employee of Congress required to file a report 16 under the Ethics in Government Act of 1978 (5 17 U.S.C. App.); 18 (4) the term ‘‘future’’ means a financial con- 19 tract obligating the buyer to purchase an asset or 20 the seller to sell an asset, such as a physical com- 21 modity or a financial instrument, at a predetermined 22 future date and price; and 23 VerDate Sep 11 2014 04:03 Apr 01, 2021 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S564.IS S564 pbinns on DSKJLVW7X2PROD with BILLS 3 •S 564 IS (5) the term ‘‘security’’ has the meaning given 1 the term in section 3(a) of the Securities Exchange 2 Act of 1934 (15 U.S.C. 78c(a)). 3 SEC. 3. PROHIBITIONS. 4 (a) TRANSACTIONS.—Except as provided in sections 5 4 and 5, no covered person may— 6 (1) purchase or sell any covered investment; or 7 (2) enter into a transaction that creates a net 8 short position in any security. 9 (b) POSITIONS.—A covered person may not serve as 10 an officer or member of any board of any for-profit asso- 11 ciation, corporation, or other entity. 12 SEC. 4. EXCEPTIONS. 13 (a) INVESTMENTS HELD BEFORE TAKING OF- 14 FICE.— 15 (1) IN GENERAL.—A covered person may have 16 control over or knowledge of the management of any 17 covered investment held by the covered person as of 18 the day before the date on which the covered person 19 took office. 20 (2) PROHIBITION ON PURCHASING OR SELL- 21 ING.—A covered person may not buy or sell any in- 22 vestment described in paragraph (1) except in the 23 case of— 24 VerDate Sep 11 2014 04:03 Apr 01, 2021 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S564.IS S564 pbinns on DSKJLVW7X2PROD with BILLS 4 •S 564 IS (A) placing the investment in a qualified 1 blind trust described in section 5; or 2 (B) divesting themselves of any investment 3 under subsection (b). 4 (b) DIVESTITURE.—A covered person may sell a cov- 5 ered investment during the 6-month period beginning 6 on— 7 (1) the date on which the covered person takes 8 office or begins employment, as applicable; or 9 (2) the date of enactment of this Act. 10 SEC. 5. TRUSTS. 11 (a) IN GENERAL.—On a case-by-case basis, the Se- 12 lect Committee on Ethics may authorize a covered person 13 to place their securities holdings in a qualified blind trust 14 approved by the committee under section 102(f) of the 15 Ethics in Government Act of 1978 (5 U.S.C. App.). 16 (b) BLIND TRUST.—A blind trust permitted under 17 this subsection shall meet the criteria in section 18 102(f)(4)(B) of the Ethics in Government Act of 1978 (5 19 U.S.C. App.), unless an alternative arrangement is ap- 20 proved by the Select Committee on Ethics. 21 SEC. 6. ADMINISTRATION AND ENFORCEMENT. 22 (a) ADMINISTRATION.— 23 (1) IN GENERAL.—The provisions of this Act 24 shall be administered by the Select Committee on 25 VerDate Sep 11 2014 04:03 Apr 01, 2021 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S564.IS S564 pbinns on DSKJLVW7X2PROD with BILLS 5 •S 564 IS Ethics of the Senate and the Committee on Ethics 1 of the House of Representatives. 2 (2) GUIDANCE.—The Select Committee on Eth- 3 ics of the Senate and the Committee on Ethics of 4 the House of Representatives are authorized to issue 5 guidance on any matter contained in this Act, in- 6 cluding— 7 (A) whether a covered person may hold an 8 employee stock option, or similar instrument, 9 that had not vested before the date on which 10 the covered person was elected; and 11 (B) the process and timeline for when a 12 covered person shall no longer serve as an offi- 13 cer or member of any board of any for-profit 14 association, corporation, or other entity. 15 (b) ENFORCEMENT.—Whoever knowingly fails to 16 comply with this Act shall be subject to a civil penalty 17 of not less than 10 percent of the value of the covered 18 investment that was purchased or sold or the security in 19 which a net short position was created in violation of this 20 Act, as applicable. 21 Æ VerDate Sep 11 2014 04:03 Apr 01, 2021 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6301 E:\BILLS\S564.IS S564 pbinns on DSKJLVW7X2PROD with BILLS