Banning Insider Trading in Congress Act

To amend the Ethics in Government Act of 1978 to prohibit transactions involving certain financial instruments by Members of Congress. 1. Short title This Act may be cited as the Banning Insider Trading in Congress Act 2. Banning insider trading in Congress (a) In general The Ethics in Government Act of 1978 (5 U.S.C. App.) is amended by inserting after title I the following: II Banning insider trading in Congress 201. Definitions In this title: (1) Covered financial instrument (A) In general The term covered financial instrument (i) any investment in— (I) a security (as defined in section 3(a) of Securities Exchange Act of 1934 ( 15 U.S.C. 78c(a) (II) a security future (as defined in that section); or (III) a commodity (as defined in section 1a of the Commodity Exchange Act ( 7 U.S.C. 1a (ii) any economic interest comparable to an interest described in clause (i) that is acquired through synthetic means, such as the use of a derivative, including an option, warrant, or other similar means. (B) Exclusions The term covered financial instrument (i) a diversified mutual fund; (ii) a diversified exchange-traded fund; (iii) a United States Treasury bill, note, or bond; or (iv) compensation from the primary occupation of a spouse or dependent of a Member of Congress. (2) Member of Congress The term Member of Congress (3) Qualified blind trust The term qualified blind trust (4) Supervising ethics committee The term supervising ethics committee (A) the Select Committee on Ethics of the Senate; and (B) the Committee on Ethics of the House of Representatives. 202. Prohibition on certain transactions and holdings involving covered financial instruments (a) Prohibition Except as provided in subsection (b), a Member of Congress, or any spouse of a Member of Congress, may not, during the term of service of the Member of Congress, hold, purchase, or sell any covered financial instrument. (b) Exceptions The prohibition under subsection (a) shall not apply to— (1) a sale by a Member of Congress, or a spouse of a Member of Congress, that is completed by the date that is— (A) for a Member of Congress serving on the date of enactment of the Banning Insider Trading in Congress Act (B) for any Member of Congress who commences service as a Member of Congress after the date of enactment of the Banning Insider Trading in Congress Act (2) a covered financial instrument held in a qualified blind trust operated on behalf of, or for the benefit of, the Member of Congress or spouse of the Member of Congress. (c) Penalties (1) Disgorgement A Member of Congress shall disgorge to the Treasury of the United States any profit from a transaction or holding involving a covered financial instrument that is conducted in violation of this section. (2) Income tax A loss from a transaction or holding involving a covered financial instrument that is conducted in violation of this section may not be deducted from the amount of income tax owed by the applicable Member of Congress or spouse of a Member of Congress. (3) Fines A Member of Congress who holds or conducts a transaction involving, or whose spouse holds or conducts a transaction involving, a covered financial instrument in violation of this section may be subject to a civil fine assessed by the supervising ethics committee under section 204. 203. Certification of compliance (a) In general Not less frequently than annually, each Member of Congress shall submit to the applicable supervising ethics committee a written certification that the Member of Congress has achieved compliance with the requirements of this title. (b) Publication The supervising ethics committees shall publish each certification submitted under subsection (a) on a publicly available website. 204. Authority of supervising ethics committees (a) In general The supervising ethics committees may implement and enforce the requirements of this title, including by— (1) issuing— (A) for Members of Congress— (i) rules governing that implementation; and (ii) 1 or more reasonable extensions to achieve compliance with this title, if the supervising ethics committee determines that a Member of Congress is making a good faith effort to divest any covered financial instruments; and (B) guidance relating to covered financial instruments; (2) publishing on the Internet certifications submitted by Members of Congress under section 203(a); and (3) assessing civil fines against any Member of Congress who is in violation of this title, subject to subsection (b). (b) Requirements for civil fines (1) In general Before imposing a fine pursuant to this section, a supervising ethics committee shall provide to the applicable Member of Congress— (A) a written notice describing each covered financial instrument transaction for which a fine will be assessed; and (B) an opportunity, with respect to each such covered financial instrument transaction— (i) for a hearing; and (ii) to achieve compliance with the requirements of this title. (2) Publication Each supervising ethics committee shall publish on a publicly available website a description of— (A) each fine assessed by the supervising ethics committee pursuant to this section; (B) the reasons why each such fine was assessed; and (C) the result of each assessment, including any hearing under paragraph (1)(B)(i) relating to the assessment. (3) Appeal A Member of Congress may appeal the assessment of a fine under this section to a vote on the floor of the Senate or the House of Representatives, as applicable, as a privileged motion. 205. Audit by Government Accountability Office Not later than 2 years after the date of enactment of the Banning Insider Trading in Congress Act (1) conduct an audit of the compliance by Members of Congress with the requirements of this title; and (2) submit to the supervising ethics committees a report describing the results of the audit conducted under paragraph (1). . (b) Conforming amendments (1) Section 109 of the Ethics in Government Act of 1978 (5 U.S.C. App.) is amended— (A) in the matter preceding paragraph (1), by striking For the purposes of this title, the term— In this title: (B) in paragraph (1), by striking means Representatives; means, as applicable— (A) the Select Committee on Ethics of the Senate; and (B) the Committee on Ethics of the House of Representatives. ; (C) in each of paragraphs (2) through (17), by striking the semicolon at the end of the paragraph and inserting a period; (D) in paragraph (18)— (i) in subparagraph (B), by striking Standards of Official Conduct Ethics (ii) in subparagraph (D), by striking ; and (E) in each of paragraphs (1) through (19)— (i) by inserting The term (ii) by inserting a paragraph heading, the text of which is comprised of the term defined in that paragraph; and (F) by redesignating paragraphs (8) and (9) as paragraphs (9) and (8), respectively, and moving the paragraphs so as to appear in numerical order. (2) Section 101(f) of the Ethics in Government Act of 1978 (5 U.S.C. App.) is amended— (A) in paragraph (9), by striking as defined under section 109(12) (B) in paragraph (10), by striking as defined under section 109(13) (C) in paragraph (11), by striking as defined under section 109(10) (D) in paragraph (12), by striking as defined under section 109(8) (3) Section 103 of the Ethics in Government Act of 1978 (5 U.S.C. App.) is amended— (A) in subsection (j)(1), by striking Standards of Official Conduct Ethics (B) in subsection ( l (i) in paragraph (9), by striking , as defined under section 109(12) (ii) in paragraph (10), by striking , as defined under section 109(13) (4) Section 105(b)(3)(A) of the Ethics in Government Act of 1978 (5 U.S.C. App.) is amended by striking described in section 109(8) or 109(10) of this Act who is a judicial employee or judicial officer (5) Section 111(2) of the Ethics in Government Act of 1978 (5 U.S.C. App.) is amended by striking Standards of Official Conduct Ethics (6) Section 402 of the Ethics in Government Act of 1978 (5 U.S.C. App.) is amended— (A) in subsection (b), by striking title II of (B) in subsection (f)(2)(B)— (i) by striking Subject to clause (iv) of this subparagraph, before Before (ii) by striking clause (iv). (7) Section 503(1)(A) of the Ethics in Government Act of 1978 (5 U.S.C. App.) is amended by striking Standards of Official Conduct Ethics (8) Section 3(4)(D) of the Lobbying Disclosure Act of 1995 ( 2 U.S.C. 1602(4)(D) legislative branch employee serving in a position described under section 109(13) officer or employee of the Congress (as defined in section 109 (9) Section 21A of the Securities Exchange Act of 1934 ( 15 U.S.C. 78u–1 (A) in subsection (g)(2)(B)(ii), by striking section 109(11) of the Ethics in Government Act of 1978 ( 5 U.S.C. App. 109(11) section 109 of the Ethics in Government Act of 1978 (5 U.S.C. App.) (B) in subsection (h)(2)— (i) in subparagraph (B), by striking section 109(8) of the Ethics in Government Act of 1978 ( 5 U.S.C. App. 109(8) section 109 of the Ethics in Government Act of 1978 (5 U.S.C. App.) (ii) in subparagraph (C), by striking under section 109(10) 5 U.S.C. App. 109(10) in section 109

Summary: Banning Insider Trading in Congress Act This bill prohibits a Member of Congress or spouse of a Member from holding, purchasing, or selling certain investments. Any profit made in violation of the prohibition must be disgorged to the Treasury and may subject the Member to a civil fine. A loss from a transaction or holding involving a covered financial instrument that is conducted in violation of this bill may not be deducted from the amount of income tax owed by the applicable Member or spouse. The bill also requires each Member to submit an annual certification of compliance and requires the Government Accountability Office to conduct a compliance audit. The prohibition does not apply to assets held in a qualified blind trust or to a sale by a Member or spouse within 180 days after the bill is enacted or within 180 days after the Member commences service, for any Member who commences service after the bill is enacted.