Eliminating Executive Branch Insider Trading Act

II 118TH CONGRESS 1ST SESSION S. 693 To amend chapter 131 of title 5, United States Code, to prohibit certain executive branch officials from holding individual stocks, and for other purposes. IN THE SENATE OF THE UNITED STATES MARCH 7, 2023 Mr. HAWLEY introduced the following bill; which was read twice and referred to the Committee on Homeland Security and Governmental Affairs A BILL To amend chapter 131 of title 5, United States Code, to prohibit certain executive branch officials from holding individual stocks, 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 ‘‘Eliminating Executive 4 Branch Insider Trading Act’’. 5 SEC. 2. SENSE OF CONGRESS. 6 It is the sense of Congress that executive branch offi- 7 cials should not have a personal financial interest in the 8 outcome of Government policy decisions. 9 VerDate Sep 11 2014 04:11 Mar 16, 2023 Jkt 039200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S693.IS S693 kjohnson on DSK79L0C42PROD with BILLS 2 •S 693 IS SEC. 3. BANNING INSIDER TRADING IN THE EXECUTIVE 1 BRANCH. 2 (a) IN GENERAL.—Chapter 131 of title 5, United 3 States Code, is amended by adding at the end the fol- 4 lowing: 5 ‘‘Subchapter IV—Banning Insider Trading in 6 the Executive Branch 7 ‘‘§ 13161. Definitions 8 ‘‘In this subchapter: 9 ‘‘(1) COVERED FINANCIAL INSTRUMENT.— 10 ‘‘(A) IN GENERAL.—The term ‘covered fi- 11 nancial instrument’ means— 12 ‘‘(i) any investment in— 13 ‘‘(I) a security (as defined in sec- 14 tion 3(a) of Securities Exchange Act 15 of 1934 (15 U.S.C. 78c(a))); 16 ‘‘(II) a security future (as de- 17 fined in that section); or 18 ‘‘(III) a commodity (as defined in 19 section 1a of the Commodity Ex- 20 change Act (7 U.S.C. 1a)); or 21 ‘‘(ii) any economic interest com- 22 parable to an interest described in clause 23 (i) that is acquired through synthetic 24 means, such as the use of a derivative, in- 25 VerDate Sep 11 2014 04:11 Mar 16, 2023 Jkt 039200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S693.IS S693 kjohnson on DSK79L0C42PROD with BILLS 3 •S 693 IS cluding an option, warrant, or other simi- 1 lar means. 2 ‘‘(B) EXCLUSIONS.—The term ‘covered fi- 3 nancial instrument’ does not include— 4 ‘‘(i) a diversified mutual fund; 5 ‘‘(ii) a diversified exchange-traded 6 fund; 7 ‘‘(iii) a United States Treasury bill, 8 note, or bond; or 9 ‘‘(iv) compensation from the primary 10 occupation of a covered individual who is a 11 spouse or dependent of an individual de- 12 scribed in subparagraphs (A) through (E) 13 of paragraph (2). 14 ‘‘(2) COVERED INDIVIDUAL.—The term ‘cov- 15 ered individual’ means— 16 ‘‘(A) the President; 17 ‘‘(B) the Vice President; 18 ‘‘(C) each officer or employee in the execu- 19 tive branch, including a special Government em- 20 ployee as defined in section 202 of title 18, who 21 occupies a position classified GS–15 or above of 22 the General Schedule or, in the case of posi- 23 tions not under the General Schedule, for which 24 the rate of basic pay is equal to or greater than 25 VerDate Sep 11 2014 04:11 Mar 16, 2023 Jkt 039200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S693.IS S693 kjohnson on DSK79L0C42PROD with BILLS 4 •S 693 IS 120 percent of the minimum rate of basic pay 1 payable for GS–15 of the General Schedule; 2 ‘‘(D) each member of a uniformed service 3 whose pay grade is at or in excess of O–7 under 4 section 201 of title 37; 5 ‘‘(E) each officer or employee in any other 6 position determined by the Director of the Of- 7 fice of Government Ethics to be of equal classi- 8 fication to the positions described in subpara- 9 graphs (C) and (D); and 10 ‘‘(F) the spouse of any individual described 11 in subparagraphs (A) through (E). 12 ‘‘(3) QUALIFIED BLIND TRUST.—The term 13 ‘qualified blind trust’ has the meaning given the 14 term in section 13104(f)(3). 15 ‘‘(4) SUPERVISING ETHICS COMMITTEE.—The 16 term ‘supervising ethics committee’ means, as appli- 17 cable— 18 ‘‘(A) the Select Committee on Ethics of 19 the Senate; and 20 ‘‘(B) the Committee on Ethics of the 21 House of Representatives. 22 VerDate Sep 11 2014 04:11 Mar 16, 2023 Jkt 039200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S693.IS S693 kjohnson on DSK79L0C42PROD with BILLS 5 •S 693 IS ‘‘§ 13162. Prohibition on certain transactions and 1 holdings involving covered financial in- 2 struments 3 ‘‘(a) PROHIBITION.—Except as provided in sub- 4 section (b), covered individual, or any spouse of a covered 5 individual, may not, during the term of service of the cov- 6 ered individual, hold, purchase, or sell any covered finan- 7 cial instrument. 8 ‘‘(b) EXCEPTIONS.—The prohibition under sub- 9 section (a) shall not apply to— 10 ‘‘(1) a sale by a covered individual, or a spouse 11 of a covered individual, that is completed by the date 12 that is— 13 ‘‘(A) for a covered individual serving on 14 the date of enactment of the Eliminating Exec- 15 utive Branch Insider Trading Act, 180 days 16 after that date of enactment; and 17 ‘‘(B) for any covered individual who com- 18 mences service as a covered individual after the 19 date of enactment of Eliminating Executive 20 Branch Insider Trading Act, 180 days after the 21 first date of the initial term of service; or 22 ‘‘(2) a covered financial instrument held in a 23 qualified blind trust operated on behalf of, or for the 24 benefit of, the covered individual or spouse of the 25 covered individual. 26 VerDate Sep 11 2014 04:11 Mar 16, 2023 Jkt 039200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S693.IS S693 kjohnson on DSK79L0C42PROD with BILLS 6 •S 693 IS ‘‘(c) PENALTIES.— 1 ‘‘(1) DISGORGEMENT.—A covered individual 2 shall disgorge to the Treasury of the United States 3 any profit from a transaction or holding involving a 4 covered financial instrument that is conducted in 5 violation of this section. 6 ‘‘(2) FINES.—A covered individual who holds or 7 conducts a transaction involving, or whose spouse 8 holds or conducts a transaction involving, a covered 9 financial instrument in violation of this section may 10 be subject to a civil fine assessed by the Attorney 11 General under section 13163. 12 ‘‘§ 13163. Civil penalties 13 ‘‘(a) CIVIL ACTION.—The Attorney General may 14 bring a civil action in any appropriate United States dis- 15 trict court against any covered individual who violates any 16 provision of section 13162. 17 ‘‘(b) CIVIL PENALTY.—The court in which any action 18 is brought under subsection (a) may assess against a cov- 19 ered individual a civil penalty of not more than $10,000 20 or the amount of compensation, if any, that the covered 21 individual received for the prohibited conduct, whichever 22 is greater. 23 VerDate Sep 11 2014 04:11 Mar 16, 2023 Jkt 039200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S693.IS S693 kjohnson on DSK79L0C42PROD with BILLS 7 •S 693 IS ‘‘§ 13164. Audit by Government Accountability Office 1 ‘‘Not later than 2 years after the date of enactment 2 of the Eliminating Executive Branch Insider Trading Act, 3 and annually thereafter, the Comptroller General of the 4 United States shall— 5 ‘‘(1) conduct an audit of the compliance by a 6 representative sample of covered individuals with the 7 requirements of this subchapter; and 8 ‘‘(2) submit to the supervising ethics commit- 9 tees a report describing the results of the audit con- 10 ducted under paragraph (1).’’. 11 (b) CLERICAL AMENDMENT.—The table of sections 12 for chapter 131 of title 5, United States Code, is amended 13 by adding at the end the following: 14 ‘‘SUBCHAPTER IV—BANNING INSIDER TRADING IN CONGRESS ‘‘13161. Definitions. ‘‘13162. Prohibition on certain transactions and holdings involving covered fi- nancial instruments. ‘‘13163. Civil penalties. ‘‘13164. Audit by Government Accountability Office.’’. Æ VerDate Sep 11 2014 04:07 Mar 17, 2023 Jkt 039200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6301 E:\BILLS\S693.IS S693 kjohnson on DSK79L0C42PROD with BILLS