Federal

PORTFOLIO Act

Source: Congress.gov · 5,145 words in original text

What This Bill Does

This bill prevents federal employees, members of Congress, the President, and the Vice President from owning or trading certain investments like stocks, commodities, and cryptocurrencies while in office. The bill sets deadlines for these officials to sell or transfer such investments and creates penalties for violations. ##

Who It Affects

Federal employees, members of Congress, the President, the Vice President, employees of the U.S. Postal Service and Postal Regulatory Commission, and veterans employed under certain chapters of Title 38 of the U.S. Code. ##

Key Provisions

- Federal employees and elected officials cannot purchase covered investments (stocks, commodities, cryptocurrencies, and similar financial assets) starting 60 days after the bill becomes law. (Sec. 202(b)(1)) - Officials must sell or transfer any existing covered investments within 180 days, either by gifting them, converting them to cash, or placing them in a qualified blind trust (a type of account where the owner cannot see what investments it holds). (Sec. 202(b)(2)) - Covered investments placed in a qualified blind trust must be sold within 18 months after being placed there. (Sec. 2(a)(2)) - A covered person who violates these rules must pay a $1,000 fee, with additional penalties of $1,000 plus 10 percent of the investment's value for each additional 30-day period the violation continues. (Sec. 203(a)) - Ethics offices must make public all requests for exemptions, extensions, and fee waivers within 30 days of decisions on those requests. (Sec. 202(d), (f)(2), (h)(2)) ##

What Changes

Federal employees and Congress members will no longer be allowed to own individual stocks, bonds, commodities, futures, or cryptocurrencies during their service. They have a 180-day window to sell these investments. Anyone who fails to comply faces escalating financial penalties. Ethics offices must publish information about who receives extensions, exemptions, and waivers. Financial disclosure forms will now require anyone with income greater than $1,000,000 to report the value rounded to the nearest $100,000. Reports of large transactions (worth $15,000 or more) must be filed within 14 days instead of the previous timeline. Cryptocurrency and digital assets must now be disclosed on financial forms. Late filing penalties increase from $200 to $500, with additional $500 penalties plus 10 percent of transaction value for each additional 30-day delay in required reports. ##

Important Definitions

- **Covered Investment**: An investment in stocks, commodities, futures, cryptocurrency, or similar financial assets acquired through derivatives (contracts that derive value from other assets). Does not include diversified mutual funds, exchange-traded funds, U.S. Treasury securities, state or municipal bonds, the Thrift Savings Plan, retirement accounts, or small business interests. - **Covered Person**: Federal employees, members of Congress, the President, and the Vice President. - **Cryptocurrency or Other Digital Asset**: An asset issued or transferred using distributed ledger or blockchain technology (technology that records transactions across multiple computers), including virtual currencies, coins, and tokens. - **Future**: A financial contract requiring someone to buy or sell an asset at a set price on a future date. - **Qualified Blind Trust**: A type of trust where the owner cannot see or control the investments held within it. ##

Effective Date

The supervising ethics office for each branch must issue regulations and specify an effective date within 180 days of the bill becoming law. (Sec. 202(k)(2)). Amendments to financial disclosure requirements apply to reports due beginning 120 days after enactment, except electronic filing changes which apply 60 days after enactment. (Sec. 3(h)). Late filing penalties take effect 30 days after enactment. (Sec. 4(b))

I 118TH CONGRESS 1ST SESSION H. R. 389 To amend the Ethics in Government Act of 1978 to restrict trading and ownership of covered investments by each Federal employee, and for other purposes. IN THE HOUSE OF REPRESENTATIVES JANUARY 17, 2023 Mr. SCHWEIKERT introduced the following bill; which was referred to the Committee on Oversight and Accountability, and in addition to the Com- mittees on the Judiciary, House Administration, and Ways and Means, 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 concerned A BILL To amend the Ethics in Government Act of 1978 to restrict trading and ownership of covered investments by each Federal employee, 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 ‘‘Preventing Opportun- 4 istic Returns on Trades and Futures by Officials, Leader- 5 ship, and Individuals in Office Act’’ or the ‘‘PORTFOLIO 6 Act’’. 7 VerDate Sep 11 2014 06:16 Jan 27, 2023 Jkt 039200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H389.IH H389 pbinns on DSKJLVW7X2PROD with $$_JOB 2 •HR 389 IH SEC. 2. RESTRICTING TRADING AND OWNERSHIP OF COV- 1 ERED INVESTMENTS BY FEDERAL PER- 2 SONNEL. 3 (a) QUALIFIED BLIND TRUST AMENDMENTS.—Sec- 4 tion 102(f)(3) of the Ethics in Government Act of 1978 5 (5 U.S.C. App 102(f)(3)) is amended— 6 (1) in subparagraph (C)(iii), by striking 7 ‘‘promptly notify’’ and inserting ‘‘promptly provide a 8 written notice to’’; and 9 (2) by adding after subparagraph (F) the fol- 10 lowing new subparagraph: 11 ‘‘(G) Any asset described as a covered invest- 12 ment under title II that is placed in a trust after the 13 date of enactment of the PORTFOLIO Act shall be 14 divested not later than 18 months after such asset 15 was so placed. 16 ‘‘(H) Notwithstanding subparagraphs (A) 17 through (G), a form of a trust approved by the Of- 18 fice of Government Ethics, Judicial Conference, 19 House of Representatives, or Senate through rule- 20 making or by majority vote for its respective juris- 21 diction.’’. 22 (b) TRADE AND OWNERSHIP RESTRICTIONS.—The 23 Ethics in Government Act of 1978 (5 U.S.C. App.) is 24 amended by inserting after title I the following: 25 VerDate Sep 11 2014 06:16 Jan 27, 2023 Jkt 039200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H389.IH H389 pbinns on DSKJLVW7X2PROD with $$_JOB 3 •HR 389 IH ‘‘TITLE II—RESTRICTIONS ON 1 TRADE AND OWNERSHIP OF 2 COVERED INVESTMENTS BY 3 FEDERAL PERSONNEL 4 ‘‘SEC. 201. DEFINITIONS. 5 ‘‘In this title: 6 ‘‘(1) COMMODITY.—The term ‘commodity’ has 7 the meaning given the term in section 1a of the 8 Commodity Exchange Act (7 U.S.C. 1a). 9 ‘‘(2) COVERED INVESTMENT.—The term ‘cov- 10 ered investment’— 11 ‘‘(A) means an investment in a security, a 12 commodity, a future, cryptocurrency or other 13 digital asset, or any comparable economic inter- 14 est acquired through synthetic means, such as 15 the use of a derivative, including an option, 16 warrant, or other similar means; and 17 ‘‘(B) does not include— 18 ‘‘(i) a widely held investment fund de- 19 scribed in section 102(f)(8) that is diversi- 20 fied and publicly traded on a national or 21 regional stock exchange; 22 ‘‘(ii) an asset held in a qualified blind 23 trust; 24 VerDate Sep 11 2014 06:16 Jan 27, 2023 Jkt 039200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H389.IH H389 pbinns on DSKJLVW7X2PROD with $$_JOB 4 •HR 389 IH ‘‘(iii) an asset held in a qualified di- 1 versified trust; 2 ‘‘(iv) a diversified mutual fund (in- 3 cluding any holdings of such a fund); 4 ‘‘(v) a diversified exchange-traded 5 fund (including any holdings of such a 6 fund); 7 ‘‘(vi) a United States Treasury bill, 8 note, or bond; 9 ‘‘(vii) a State or municipal govern- 10 ment bill, note, or bond; 11 ‘‘(viii) the Thrift Savings Plan (in- 12 cluding any holdings in such plan); 13 ‘‘(ix) any compensation received by 14 the spouse or dependent child of a covered 15 official from their primary employer; 16 ‘‘(x) any investment fund held in a 17 Federal, State, or local government em- 18 ployee retirement plan; or 19 ‘‘(xi) an interest in a small business 20 concern or family-owned business that does 21 not present a conflict of interest. 22 ‘‘(3) COVERED PERSON.—The term ‘covered 23 person’ means— 24 VerDate Sep 11 2014 06:16 Jan 27, 2023 Jkt 039200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H389.IH H389 pbinns on DSKJLVW7X2PROD with $$_JOB 5 •HR 389 IH ‘‘(A) any employee (as that term is defined 1 in section 2105 of title 5, United States Code), 2 including— 3 ‘‘(i) an officer or employee of the 4 United States Postal Service and the Post- 5 al Regulatory Commission; 6 ‘‘(ii) notwithstanding section 7425(b) 7 of title 38, United States Code, employees 8 appointed under chapter 73 or 74 of such 9 title 38; and 10 ‘‘(iii) any other individual occupying a 11 position in the civil service (as that term is 12 defined in section 2101 of such title 5); 13 ‘‘(B) a Member of Congress as defined in 14 section 109(12); 15 ‘‘(C) the President; and 16 ‘‘(D) the Vice President. 17 ‘‘(4) CRYPTOCURRENCY OR OTHER DIGITAL 18 ASSET.—The term ‘cryptocurrency or other digital 19 asset’ means an asset that is issued or transferred 20 using distributed ledger or blockchain technology, in- 21 cluding: virtual currencies, coins and tokens, or any 22 other digital asset specified by regulations of a filer’s 23 supervising ethics office. 24 VerDate Sep 11 2014 06:16 Jan 27, 2023 Jkt 039200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H389.IH H389 pbinns on DSKJLVW7X2PROD with $$_JOB 6 •HR 389 IH ‘‘(5) DEPENDENT CHILD.—The term ‘depend- 1 ent child’ means an individual described in section 2 109(2). 3 ‘‘(6) INTERESTED PARTY.—The term ‘inter- 4 ested party’ has the meaning given the term in sec- 5 tion 102(f)(3)(E). 6 ‘‘(7) FUTURE.—The term ‘future’ means a fi- 7 nancial contract obligating the buyer to purchase an 8 asset or the seller to sell an asset, such as a physical 9 commodity or a financial investment, at a predeter- 10 mined future date and price. 11 ‘‘(8) QUALIFIED BLIND TRUST.—The term 12 ‘qualified blind trust’ has the meaning given the 13 term in section 102(f)(3). 14 ‘‘(9) QUALIFIED DIVERSIFIED TRUST.—The 15 term ‘qualified diversified trust’ means a trust de- 16 scribed in section 102(f)(4)(B). 17 ‘‘(10) SECURITY.—The term ‘security’ has the 18 meaning given the term in section 3(a) of the Secu- 19 rities Exchange Act of 1934 (15 U.S.C. 78c(a)). 20 ‘‘(11) SMALL BUSINESS CONCERN.—The term 21 ‘small business concern’ has the meaning given that 22 term under section 3 of the Small Business Act (15 23 U.S.C. 632). 24 VerDate Sep 11 2014 06:16 Jan 27, 2023 Jkt 039200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H389.IH H389 pbinns on DSKJLVW7X2PROD with $$_JOB 7 •HR 389 IH ‘‘(12) SUPERVISING ETHICS OFFICE.—The term 1 ‘supervising ethics office’ has the meaning given the 2 term in section 109(18). 3 ‘‘SEC. 202. OWNERSHIP OF COVERED INVESTMENTS. 4 ‘‘(a) CONDUCT DURING FEDERAL SERVICE.—Except 5 as described in paragraph (2) of subsection (b) or sub- 6 sections (c) through (h), no covered person may own or 7 trade any covered investment. 8 ‘‘(b) COMPLIANCE.—To comply with the require- 9 ments under paragraph (1)— 10 ‘‘(1) a covered person shall not purchase any 11 covered investment beginning 60 days after the date 12 of enactment of the PORTFOLIO Act or the date 13 on which an individual becomes a covered person, 14 whichever is later; and 15 ‘‘(2) a covered person shall divest of any cov- 16 ered investment within 180 days of the effective date 17 established in subsection (k)(2) or the date on which 18 an individual becomes a covered person, whichever is 19 later— 20 ‘‘(A) through gift or charitable donation of 21 a covered investment; 22 ‘‘(B) by converting a covered investment to 23 cash; or 24 VerDate Sep 11 2014 06:16 Jan 27, 2023 Jkt 039200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H389.IH H389 pbinns on DSKJLVW7X2PROD with $$_JOB 8 •HR 389 IH ‘‘(C) by placing a covered investment in a 1 qualified blind trust in accordance with sub- 2 section (c). 3 ‘‘(c) QUALIFIED BLIND TRUST.— 4 ‘‘(1) COVERED PERSONS AS OF DATE OF EN- 5 ACTMENT.—An individual who is a covered person 6 as of the date of enactment of the PORTFOLIO Act 7 may comply with subsection (b) by placing any cov- 8 ered investment owned by such person into a quali- 9 fied blind trust not later than 180 days after the ef- 10 fective date established in subsection (k)(2). 11 ‘‘(2) COVERED PERSONS AFTER DATE OF EN- 12 ACTMENT.—An individual who becomes a covered 13 person after the date of enactment of the PORT- 14 FOLIO Act may comply with subsection (b) by plac- 15 ing any covered investment owned by such person 16 into a qualified blind trust not later than 180 days 17 after the effective date established in subsection 18 (k)(2) or the date on which the individual becomes 19 a covered person, whichever is later. 20 ‘‘(3) MINGLING OF ASSETS.—A spouse or de- 21 pendent child of a covered person may place a cov- 22 ered investment in a qualified blind trust established 23 by a covered person. 24 VerDate Sep 11 2014 06:16 Jan 27, 2023 Jkt 039200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H389.IH H389 pbinns on DSKJLVW7X2PROD with $$_JOB 9 •HR 389 IH ‘‘(d) PUBLIC NOTIFICATION.—Not later than 30 days 1 after receiving any written notice under section 2 102(f)(3)(C)(iii), the supervising ethics office shall make 3 such notices publicly available in the manner provided 4 under section 105(a). 5 ‘‘(e) EXCEPTION.—Subsection (a) shall not apply to 6 an individual who ceases to be a covered person within 7 180 days of the date of the enactment of the PORT- 8 FOLIO Act. 9 ‘‘(f) COMPLEX FINANCIAL ARRANGEMENTS.— 10 ‘‘(1) TEMPORARY EXEMPTIONS.—A supervising 11 ethics office may grant a temporary exemption to a 12 covered person regarding their compliance with the 13 requirements of subsection (a) for investments held 14 in trusts or other complex financial arrangements in 15 which— 16 ‘‘(A) the covered person entered into, or 17 was made a beneficiary of or to, a complex fi- 18 nancial arrangement before the enactment of 19 the PORTFOLIO Act; and 20 ‘‘(B) the covered person is contractually 21 prohibited from— 22 ‘‘(i) having knowledge or control of 23 the covered person’s investments; or 24 VerDate Sep 11 2014 06:16 Jan 27, 2023 Jkt 039200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H389.IH H389 pbinns on DSKJLVW7X2PROD with $$_JOB 10 •HR 389 IH ‘‘(ii) withdrawing the investment in 1 certain circumstances. 2 ‘‘(2) PUBLICATION.—A supervising ethics office 3 shall make publicly available in the manner provided 4 under section 105(a)— 5 ‘‘(A) any requests from a covered person 6 for a temporary exemption within 30 days of 7 receipt; and 8 ‘‘(B) any decision by the supervising ethics 9 office on the temporary exemption request of a 10 covered person within 30 days of issuing it. 11 ‘‘(g) ASSETS ACQUIRED IN SPECIAL CIR- 12 CUMSTANCES.— 13 ‘‘(1) DIVESTMENT.—Except as described in 14 paragraph (2), in the event that a covered person 15 acquires a covered investment after the date of en- 16 actment of the PORTFOLIO Act other than by pur- 17 chase (such as by marriage, inheritance, divorce set- 18 tlement, or other circumstance), the covered person 19 shall have 180 days of the effective date established 20 in subsection (k)(2) to divest of such investment 21 through any means provided under subsection 22 (b)(2). 23 ‘‘(2) EXTENSION.—A supervising ethics office 24 may grant a covered person an extension of time to 25 VerDate Sep 11 2014 06:16 Jan 27, 2023 Jkt 039200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H389.IH H389 pbinns on DSKJLVW7X2PROD with $$_JOB 11 •HR 389 IH comply with the deadline specified in paragraph (1) 1 in accordance with subsection (h). 2 ‘‘(h) EXTENSIONS.—With respect to subsections (a) 3 and (g), in response to a written request for an extension, 4 a supervising ethics office may grant a covered person one 5 or more extensions to comply with such subsections in the 6 following manner: 7 ‘‘(1) An extension of up to 30 days may be 8 granted but the total of all extensions for each cov- 9 ered person in a calendar year may not exceed 90 10 days. 11 ‘‘(2) A copy of each extension granted by the 12 supervising ethics office shall be made publicly avail- 13 able in the manner provided under section 105(a). 14 ‘‘(i) RULES PROVIDING NONRECOGNITION OF GAIN 15 ON SALES TO COMPLY WITH CONFLICT-OF-INTEREST 16 REQUIREMENTS NOT APPLICABLE.—For purposes of sec- 17 tion 1043 of the Internal Revenue Code of 1986, this title 18 (and any regulation or rule issued pursuant to this title) 19 shall not be treated as a statute, regulation, or rule de- 20 scribed in subsection (b)(2)(A) of such section. 21 ‘‘(j) ASSETS UPON SEPARATION.—An individual who 22 is a covered person under this section may not dissolve 23 any qualified blind trust in which a covered investment 24 has been placed pursuant to subsection (c), or otherwise 25 VerDate Sep 11 2014 06:16 Jan 27, 2023 Jkt 039200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H389.IH H389 pbinns on DSKJLVW7X2PROD with $$_JOB 12 •HR 389 IH control such an investment, until the date that is 180 days 1 after the date such individual ceases to be a covered per- 2 son. 3 ‘‘(k) ADMINISTRATION AND ENFORCEMENT.— 4 ‘‘(1) IN GENERAL.—The provisions of this sec- 5 tion shall be administered by the supervising ethics 6 office for each branch. 7 ‘‘(2) REGULATIONS.—Within 180 days of en- 8 actment of the PORTFOLIO Act, the supervising 9 ethics office for each branch shall issue regulations 10 implementing the provisions of this section and 11 specifying an effective date for the provisions of this 12 section. 13 ‘‘(3) GUIDANCE.—The supervising ethics office 14 for each branch is authorized to issue guidance on 15 any matter contained in this section for its respec- 16 tive jurisdiction. 17 ‘‘SEC. 203. PENALTIES FOR VIOLATIONS OF RESTRICTIONS 18 ON TRADING AND OWNERSHIP OF COVERED 19 INVESTMENTS. 20 ‘‘(a) PENALTIES.— 21 ‘‘(1) IN GENERAL.—Any covered person who 22 violates the restrictions on trading or ownership of 23 covered investments in section 202 shall, at the di- 24 rection of the supervising ethics office, pay a fee of 25 VerDate Sep 11 2014 06:16 Jan 27, 2023 Jkt 039200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\H389.IH H389 pbinns on DSKJLVW7X2PROD with $$_JOB 13 •HR 389 IH $1,000 after being notified by the supervising ethics 1 office of such violation. 2 ‘‘(2) ASSESSMENT OF ADDITIONAL PEN- 3 ALTIES.—If [Text truncated for display. Full text available on Congress.gov.]

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