Ban Conflicted Trading Act

I 117TH CONGRESS 1ST SESSION H. R. 1579 To prohibit Members of Congress from purchasing or selling certain investments, and for other purposes. IN THE HOUSE OF REPRESENTATIVES MARCH 3, 2021 Mr. KRISHNAMOORTHI (for himself, Ms. OCASIO-CORTEZ, Mr. NEGUSE, Mr. GAETZ, Mr. CLOUD, Ms. SCANLON, Mr. TAKANO, Ms. SCHAKOWSKY, Ms. NORTON, Mr. JONES, Mr. BLUMENAUER, Ms. TLAIB, Mr. POCAN, Ms. SPEIER, and Mr. DEUTCH) introduced the following bill; which was re- ferred to the Committee on Financial Services, and in addition to the Committees on Agriculture, and House Administration, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee con- cerned 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 VerDate Sep 11 2014 23:48 Apr 17, 2021 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H1579.IH H1579 kjohnson on DSK79L0C42PROD with BILLS 2 •HR 1579 IH (1) the term ‘‘commodity’’ has the meaning 1 given the term in section 1a of the Commodity Ex- 2 change Act (7 U.S.C. 1a); 3 (2) the term ‘‘covered investment’’— 4 (A) means investment in a security, a com- 5 modity, or a future, or any comparable eco- 6 nomic interest acquired through synthetic 7 means such as the use of a derivative; and 8 (B) does not include— 9 (i) a widely held investment fund de- 10 scribed in section 102(f)(8) of the Ethics 11 in Government Act of 1978 (5 U.S.C. 12 App.); or 13 (ii) a United States Treasury bill, 14 note, or bond; 15 (3) the term ‘‘covered person’’ means— 16 (A) a sitting Member of Congress; and 17 (B) an individual employed as an officer or 18 employee of Congress required to file a report 19 under the Ethics in Government Act of 1978 (5 20 U.S.C. App.); 21 (4) the term ‘‘future’’ means a financial con- 22 tract obligating the buyer to purchase an asset or 23 the seller to sell an asset, such as a physical com- 24 VerDate Sep 11 2014 23:48 Apr 17, 2021 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H1579.IH H1579 kjohnson on DSK79L0C42PROD with BILLS 3 •HR 1579 IH modity or a financial instrument, at a predetermined 1 future date and price; and 2 (5) the term ‘‘security’’ has the meaning given 3 the term in section 3(a) of the Securities Exchange 4 Act of 1934 (15 U.S.C. 78c(a)). 5 SEC. 3. PROHIBITIONS. 6 (a) TRANSACTIONS.—Except as provided in sections 7 4 and 5, no covered person may— 8 (1) purchase or sell any covered investment; or 9 (2) enter into a transaction that creates a net 10 short position in any security. 11 (b) POSITIONS.—A covered person may not serve as 12 an officer or member of any board of any for-profit asso- 13 ciation, corporation, or other entity. 14 SEC. 4. EXCEPTIONS. 15 (a) INVESTMENTS HELD BEFORE TAKING OF- 16 FICE.— 17 (1) IN GENERAL.—A covered person may have 18 control over or knowledge of the management of any 19 covered investment held by the covered person as of 20 the day before the date on which the covered person 21 took office. 22 (2) PROHIBITION ON PURCHASING OR SELL- 23 ING.—A covered person may not buy or sell any in- 24 VerDate Sep 11 2014 23:48 Apr 17, 2021 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H1579.IH H1579 kjohnson on DSK79L0C42PROD with BILLS 4 •HR 1579 IH vestment described in paragraph (1) except in the 1 case of— 2 (A) placing the investment in a qualified 3 blind trust described in section 5; or 4 (B) divesting themselves of any investment 5 under subsection (b). 6 (b) DIVESTITURE.—A covered person may sell a cov- 7 ered investment during the 6-month period beginning 8 on— 9 (1) the date on which the covered person takes 10 office or begins employment, as applicable; or 11 (2) the date of enactment of this Act. 12 SEC. 5. TRUSTS. 13 (a) IN GENERAL.—On a case-by-case basis, the Se- 14 lect Committee on Ethics may authorize a covered person 15 to place their securities holdings in a qualified blind trust 16 approved by the committee under section 102(f) of the 17 Ethics in Government Act of 1978 (5 U.S.C. App.). 18 (b) BLIND TRUST.—A blind trust permitted under 19 this subsection shall meet the criteria in section 20 102(f)(4)(B) of the Ethics in Government Act of 1978 (5 21 U.S.C. App.), unless an alternative arrangement is ap- 22 proved by the Select Committee on Ethics. 23 SEC. 6. ADMINISTRATION AND ENFORCEMENT. 24 (a) ADMINISTRATION.— 25 VerDate Sep 11 2014 23:48 Apr 17, 2021 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H1579.IH H1579 kjohnson on DSK79L0C42PROD with BILLS 5 •HR 1579 IH (1) IN GENERAL.—The provisions of this Act 1 shall be administered by the Select Committee on 2 Ethics of the Senate and the Committee on Ethics 3 of the House of Representatives. 4 (2) GUIDANCE.—The Select Committee on Eth- 5 ics of the Senate and the Committee on Ethics of 6 the House of Representatives are authorized to issue 7 guidance on any matter contained in this Act, in- 8 cluding— 9 (A) whether a covered person may hold an 10 employee stock option, or similar instrument, 11 that had not vested before the date on which 12 the covered person was elected; and 13 (B) the process and timeline for when a 14 covered person shall no longer serve as an offi- 15 cer or member of any board of any for-profit 16 association, corporation, or other entity. 17 (b) ENFORCEMENT.—Whoever knowingly fails to 18 comply with this Act shall be subject to a civil penalty 19 of not less than 10 percent of the value of the covered 20 investment that was purchased or sold or the security in 21 which a net short position was created in violation of this 22 Act, as applicable. 23 Æ VerDate Sep 11 2014 23:48 Apr 17, 2021 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6301 E:\BILLS\H1579.IH H1579 kjohnson on DSK79L0C42PROD with BILLS