What This Bill Does
This bill would ban Members of Congress and their spouses from buying, selling or holding certain investments while the member serves in office. The bill also requires Congress members to disgorge (give back) any profits from illegal trades and prevents them from using losses to reduce their taxes.
Who It Affects
Members of Congress and their spouses.
Key Provisions
• Members of Congress and their spouses cannot hold, purchase or sell covered financial instruments during the member's term of service, with a 180-day grace period to sell existing holdings (Sec. 202(a) and (b)).
• Covered financial instruments include stocks, security futures (a type of investment contract based on a stock's price), commodities (basic goods like oil or wheat), and synthetic investments like options and warrants (special rights to buy or sell at a set price), but exclude diversified mutual funds, exchange-traded funds (investment funds that trade like stocks), Treasury bills, notes and bonds, and a spouse's regular job compensation (Sec. 201(1)).
• Members must submit written certifications at least once per year proving they have complied with the ban, and these certifications will be published on a public website (Sec. 203).
• Members who violate the ban must give all profits to the U.S. Treasury, cannot deduct losses from income taxes, and may face civil fines assessed by Senate or House ethics committees (Sec. 202(c)).
• The Senate ethics committee and House ethics committee can extend compliance deadlines if a member is making a good faith effort to sell banned investments, and can publish descriptions of all fines, reasons for fines, and hearing results online (Sec. 204).
What Changes
If this bill becomes law, Congress members and their spouses would no longer legally own most individual stocks, commodity contracts and other direct investments. Members would have 180 days from the bill's passage to sell these holdings. Members already in office when the law passes get 180 days, while newly elected members get 180 days from their first day in office.
Important Definitions
The bill defines "covered financial instrument" as any investment in stocks, security futures or commodities, plus similar economic interests created through synthetic means like derivatives (contracts whose value is based on an underlying asset). Qualified blind trusts (accounts managed by independent trustees where the owner does not know what investments are held) are excluded from the ban.
II
118TH CONGRESS
1ST SESSION
S. 58
To amend the Ethics in Government Act of 1978 to prohibit transactions
involving certain financial instruments by Members of Congress.
IN THE SENATE OF THE UNITED STATES
JANUARY 24 (legislative day, JANUARY 3), 2023
Mr. HAWLEY introduced the following bill; which was read twice and referred
to the Committee on Finance
A BILL
To amend the Ethics in Government Act of 1978 to prohibit
transactions involving certain financial instruments by
Members of Congress.
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 Elected
4
Leaders from Owning Securities and Investments
5
(PELOSI) Act’’.
6
SEC. 2. BANNING INSIDER TRADING IN CONGRESS.
7
(a) IN GENERAL.—The Ethics in Government Act of
8
1978 (5 U.S.C. App.) is amended by inserting after title
9
I the following:
10
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‘‘TITLE II—BANNING INSIDER
1
TRADING IN CONGRESS
2
‘‘SEC. 201. DEFINITIONS.
3
‘‘In this title:
4
‘‘(1) COVERED FINANCIAL INSTRUMENT.—
5
‘‘(A) IN GENERAL.—The term ‘covered fi-
6
nancial instrument’ means—
7
‘‘(i) any investment in—
8
‘‘(I) a security (as defined in sec-
9
tion 3(a) of Securities Exchange Act
10
of 1934 (15 U.S.C. 78c(a)));
11
‘‘(II) a security future (as de-
12
fined in that section); or
13
‘‘(III) a commodity (as defined in
14
section 1a of the Commodity Ex-
15
change Act (7 U.S.C. 1a)); and
16
‘‘(ii) any economic interest com-
17
parable to an interest described in clause
18
(i) that is acquired through synthetic
19
means, such as the use of a derivative, in-
20
cluding an option, warrant, or other simi-
21
lar means.
22
‘‘(B) EXCLUSIONS.—The term ‘covered fi-
23
nancial instrument’ does not include—
24
‘‘(i) a diversified mutual fund;
25
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•S 58 IS
‘‘(ii) a diversified exchange-traded
1
fund;
2
‘‘(iii) a United States Treasury bill,
3
note, or bond; or
4
‘‘(iv) compensation from the primary
5
occupation of a spouse or dependent of a
6
Member of Congress.
7
‘‘(2) MEMBER OF CONGRESS.—The term ‘Mem-
8
ber of Congress’ has the meaning given the term in
9
section 109.
10
‘‘(3) QUALIFIED
BLIND
TRUST.—The term
11
‘qualified blind trust’ has the meaning given the
12
term in section 102(f)(3).
13
‘‘(4) SUPERVISING
ETHICS
COMMITTEE.—The
14
term ‘supervising ethics committee’ means, as appli-
15
cable—
16
‘‘(A) the Select Committee on Ethics of
17
the Senate; and
18
‘‘(B) the Committee on Ethics of the
19
House of Representatives.
20
‘‘SEC. 202. PROHIBITION ON CERTAIN TRANSACTIONS AND
21
HOLDINGS INVOLVING COVERED FINANCIAL
22
INSTRUMENTS.
23
‘‘(a) PROHIBITION.—Except as provided in sub-
24
section (b), a Member of Congress, or any spouse of a
25
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•S 58 IS
Member of Congress, may not, during the term of service
1
of the Member of Congress, hold, purchase, or sell any
2
covered financial instrument.
3
‘‘(b) EXCEPTIONS.—The prohibition under sub-
4
section (a) shall not apply to—
5
‘‘(1) a sale by a Member of Congress, or a
6
spouse of a Member of Congress, that is completed
7
by the date that is—
8
‘‘(A) for a Member of Congress serving on
9
the date of enactment of the Preventing Elected
10
Leaders from Owning Securities and Invest-
11
ments (PELOSI) Act, 180 days after that date
12
of enactment; and
13
‘‘(B) for any Member of Congress who
14
commences service as a Member of Congress
15
after the date of enactment of the Preventing
16
Elected Leaders from Owning Securities and
17
Investments (PELOSI) Act, 180 days after the
18
first date of the initial term of service; or
19
‘‘(2) a covered financial instrument held in a
20
qualified blind trust operated on behalf of, or for the
21
benefit of, the Member of Congress or spouse of the
22
Member of Congress.
23
‘‘(c) PENALTIES.—
24
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•S 58 IS
‘‘(1) DISGORGEMENT.—A Member of Congress
1
shall disgorge to the Treasury of the United States
2
any profit from a transaction or holding involving a
3
covered financial instrument that is conducted in
4
violation of this section.
5
‘‘(2) INCOME TAX.—A loss from a transaction
6
or holding involving a covered financial instrument
7
that is conducted in violation of this section may not
8
be deducted from the amount of income tax owed by
9
the applicable Member of Congress or spouse of a
10
Member of Congress.
11
‘‘(3) FINES.—A Member of Congress who holds
12
or conducts a transaction involving, or whose spouse
13
holds or conducts a transaction involving, a covered
14
financial instrument in violation of this section may
15
be subject to a civil fine assessed by the supervising
16
ethics committee under section 204.
17
‘‘SEC. 203. CERTIFICATION OF COMPLIANCE.
18
‘‘(a) IN GENERAL.—Not less frequently than annu-
19
ally, each Member of Congress shall submit to the applica-
20
ble supervising ethics committee a written certification
21
that the Member of Congress has achieved compliance
22
with the requirements of this title.
23
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‘‘(b) PUBLICATION.—The supervising ethics commit-
1
tees shall publish each certification submitted under sub-
2
section (a) on a publicly available website.
3
‘‘SEC. 204. AUTHORITY OF SUPERVISING ETHICS COMMIT-
4
TEES.
5
‘‘(a) IN GENERAL.—The supervising ethics commit-
6
tees may implement and enforce the requirements of this
7
title, including by—
8
‘‘(1) issuing—
9
‘‘(A) for Members of Congress—
10
‘‘(i) rules governing that implementa-
11
tion; and
12
‘‘(ii) 1 or more reasonable extensions
13
to achieve compliance with this title, if the
14
supervising ethics committee determines
15
that a Member of Congress is making a
16
good faith effort to divest any covered fi-
17
nancial instruments; and
18
‘‘(B) guidance relating to covered financial
19
instruments;
20
‘‘(2) publishing on the internet certifications
21
submitted by Members of Congress under section
22
203(a); and
23
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•S 58 IS
‘‘(3) assessing civil fines against any Member of
1
Congress who is in violation of this title, subject to
2
subsection (b).
3
‘‘(b) REQUIREMENTS FOR CIVIL FINES.—
4
‘‘(1) IN GENERAL.—Before imposing a fine pur-
5
suant to this section, a supervising ethics committee
6
shall provide to the applicable Member of Con-
7
gress—
8
‘‘(A) a written notice describing each cov-
9
ered financial instrument transaction for which
10
a fine will be assessed; and
11
‘‘(B) an opportunity, with respect to each
12
such covered financial instrument transaction—
13
‘‘(i) for a hearing; and
14
‘‘(ii) to achieve compliance with the
15
requirements of this title.
16
‘‘(2) PUBLICATION.—Each supervising ethics
17
committee shall publish on a publicly available
18
website a description of—
19
‘‘(A) each fine assessed by the supervising
20
ethics committee pursuant to this section;
21
‘‘(B) the reasons why each such fine was
22
assessed; and
23
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•S 58 IS
‘‘(C) the result of each assessment, includ-
1
ing any hearing under paragraph (1)(B)(i) re-
2
lating to the assessment.
3
‘‘(3) APPEAL.—A Member of Congress may ap-
4
peal the assessment of a fine under this section to
5
a vote on the floor of the Senate or the House of
6
Representatives, as applicable, as a privileged mo-
7
tion.
8
‘‘SEC. 205. AUDIT BY GOVERNMENT ACCOUNTABILITY OF-
9
FICE.
10
‘‘Not later than 2 years after the date of enactment
11
of the Preventing Elected Leaders from Owning Securities
12
and Investments (PELOSI) Act, the Comptroller General
13
of the United States shall—
14
‘‘(1) conduct an audit of the compliance by
15
Members of Congress with the requirements of this
16
title; and
17
‘‘(2) submit to the supervising ethics commit-
18
tees a report describing the results of the audit con-
19
ducted under paragraph (1).’’.
20
(b) CONFORMING AMENDMENTS.—
21
(1) Section 109 of the Ethics in Government
22
Act of 1978 (5 U.S.C. App.) is amended—
23
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•S 58 IS
(A) in the matter preceding paragraph (1),
1
by striking ‘‘For the purposes of this title, the
2
term—’’ and inserting ‘‘In this title:’’;
3
(B) in paragraph (1), by striking ‘‘means’’
4
and all that follows through ‘‘Representatives;’’
5
and inserting the following: ‘‘means, as applica-
6
ble—
7
‘‘(A) the Select Committee on Ethics of
8
the Senate; and
9
‘‘(B) the Committee on Ethics of the
10
House of Representatives.’’;
11
(C) in each of paragraphs (2) through
12
(17), by striking the semicolon at the end of the
13
paragraph and inserting a period;
14
(D) in paragraph (18)—
15
(i) in subparagraph (B), by striking
16
‘‘Standards of Official Conduct’’ and in-
17
serting ‘‘Ethics’’; and
18
(ii) in subparagraph (D), by striking
19
‘‘; and’’ at the end and inserting a period;
20
(E) in each of paragraphs (1) through
21
(19)—
22
(i) by inserting ‘‘The term’’ after the
23
paragraph designation; and
24
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(ii) by inserting a paragraph heading,
1
the text of which is comprised of the term
2
defined in that paragraph; and
3
(F) by redesignating paragraphs (8) and
4
(9) as paragraphs (9) and (8), respectively, and
5
moving the paragraphs so as to appear in nu-
6
merical order.
7
(2) Section 101(f) of the Ethics in Government
8
Act of 1978 (5 U.S.C. App.) is amended—
9
(A) in paragraph (9), by striking ‘‘as de-
10
fined under section 109(12)’’;
11
(B) in paragraph (10), by striking ‘‘as de-
12
fined under section 109(13)’’;
13
(C) in paragraph (11), by striking ‘‘as de-
14
fined under section 109(10)’’; and
15
(D) in paragraph (12), by striking ‘‘as de-
16
fined under section 109(8)’’.
17
(3) Section 111(2) of the Ethics in Government
18
Act of 1978 (5 U.S.C. App.) is amended by striking
19
‘‘Standards of Official Conduct’’ and inserting ‘‘Eth-
20
ics’’.
21
(4) Section 402 of the Ethics in Government
22
Act of 1978 (5 U.S.C. App.) is amended—
23
(A) in subsection (b), by striking ‘‘title II
24
of’’ each place it appears; and
25
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•S 58 IS
(B) in subsection (f)(2)(B)—
1
(i) by striking ‘‘Subject to clause (iv)
2
of this subparagraph, before’’ each place it
3
appears and inserting ‘‘Before’’; and
4
(ii) by striking clause (iv).
5
(5) Section 503(1)(A) of the Ethics in Govern-
6
ment Act of 1978 (5 U.S.C. App.) is amended by
7
striking ‘‘Standards of Official Conduct’’ and insert-
8
ing ‘‘Ethics’’.
9
(6) Section 3(4)(D) of the Lobbying Disclosure
10
Act of 1995 (2 U.S.C. 1602(4)(D)) is amended by
11
striking ‘‘legislative branch employee serving in a po-
12
sition described under section 109(13) of the Ethics
13
in Government Act of 1978 (5 U.S.C. App.)’’ and
14
inserting ‘‘officer or employee of the Congress (as
15
defined in section 109 of the Ethics in Government
16
Act of 1978 (5 U.S.C. App.))’’.
17
(7) Section 21A of the Securities Exchange Act
18
of 1934 (15 U.S.C. 78u–1) is amended—
19
(A) in subsection (g)(2)(B)(ii), by striking
20
‘‘section 109(11) of the Ethics in Government
21
Act of 1978 (5 U.S.C. App. 109(11))’’ and in-
22
serting ‘‘section 109 of the Ethics in Govern-
23
ment Act of 1978 (5 U.S.C. App.)’’; and
24
(B) in subsection (h)(2)—
25
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(i) in subparagraph (B), by striking
1
‘‘section 109(8) of the Ethics in Govern-
2
ment Act of 1978 (5 U.S.C. App. 109(8))’’
3
and inserting ‘‘section 109 of the Ethics in
4
Government Act of 1978 (5 U.S.C. App.)’’;
5
and
6
(ii) in subparagraph (C), by striking
7
‘‘under section 109(10) of the Ethics in
8
Government Act of 1978 (5 U.S.C. App.
9
109(10))’’ and inserting ‘‘in section 109 of
10
the Ethics in Government Act of 1978 (5
11
U.S.C. App.)’’.
12
Æ
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