Ban Conflicted Trading Act
Bill: H.R.1579 | Sponsor: Rep. Krishnamoorthi, Raja (D-IL)
Policy area: Congress

Summary:
Ban Conflicted Trading Act
This bill prohibits a Member of Congress or certain congressional officers or employees from (1) purchasing or selling specified investments, (2) entering into a transaction that creates a net short position in a security, or (3) serving as an officer or member of any board of any for-profit entity.

To prohibit Members of Congress from purchasing or selling certain 
                  investments, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Ban Conflicted Trading Act''.

SEC. 2. DEFINITIONS.

    In this Act--
            (1) the term ``commodity'' has the meaning given the term 
        in section 1a of the Commodity Exchange Act (7 U.S.C. 1a);
            (2) the term ``covered investment''--
                    (A) means investment in a security, a commodity, or 
                a future, or any comparable economic interest acquired 
                through synthetic means such as the use of a 
                derivative; and
                    (B) does not include--
                            (i) a widely held investment fund described 
                        in section 102(f)(8) of the Ethics in 
                        Government Act of 1978 (5 U.S.C. App.); or
                            (ii) a United States Treasury bill, note, 
                        or bond;
            (3) the term ``covered person'' means--
                    (A) a sitting Member of Congress; and
                    (B) an individual employed as an officer or 
                employee of Congress required to file a report under 
                the Ethics in Government Act of 1978 (5 U.S.C. App.);
            (4) the term ``future'' means a financial contract 
        obligating the buyer to purchase an asset or the seller to sell 
        an asset, such as a physical commodity or a financial 
        instrument, at a predetermined future date and price; and
            (5) the term ``security'' has the meaning given the term in 
        section 3(a) of the Securities Exchange Act of 1934 (15 U.S.C. 
        78c(a)).

SEC. 3. PROHIBITIONS.

    (a) Transactions.--Except as provided in sections 4 and 5, no 
covered person may--
            (1) purchase or sell any covered investment; or
            (2) enter into a transaction that creates a net short 
        position in any security.
    (b) Positions.--A covered person may not serve as an officer or 
member of any board of any for-profit association, corporation, or 
other entity.

SEC. 4. EXCEPTIONS.

    (a) Investments Held Before Taking Office.--
            (1) In general.--A covered person may have control over or 
        knowledge of the management of any covered investment held by 
        the covered person as of the day before the date on which the 
        covered person took office.
            (2) Prohibition on purchasing or selling.--A covered person 
        may not buy or sell any investment described in paragraph (1) 
        except in the case of--
                    (A) placing the investment in a qualified blind 
                trust described in section 5; or
                    (B) divesting themselves of any investment under 
                subsection (b).
    (b) Divestiture.--A covered person may sell a covered investment 
during the 6-month period beginning on--
            (1) the date on which the covered person takes office or 
        begins employment, as applicable; or
            (2) the date of enactment of this Act.

SEC. 5. TRUSTS.

    (a) In General.--On a case-by-case basis, the Select Committee on 
Ethics may authorize a covered person to place their securities 
holdings in a qualified blind trust approved by the committee under 
section 102(f) of the Ethics in Government Act of 1978 (5 U.S.C. App.).
    (b) Blind Trust.--A blind trust permitted under this subsection 
shall meet the criteria in section 102(f)(4)(B) of the Ethics in 
Government Act of 1978 (5 U.S.C. App.), unless an alternative 
arrangement is approved by the Select Committee on Ethics.

SEC. 6. ADMINISTRATION AND ENFORCEMENT.

    (a) Administration.--
            (1) In general.--The provisions of this Act shall be 
        administered by the Select Committee on Ethics of the Senate 
        and the Committee on Ethics of the House of Representatives.
            (2) Guidance.--The Select Committee on Ethics of the Senate 
        and the Committee on Ethics of the House of Representatives are 
        authorized to issue guidance on any matter contained in this 
        Act, including--
                    (A) whether a covered person may hold an employee 
                stock option, or similar instrument, that had not 
                vested before the date on which the covered person was 
                elected; and
                    (B) the process and timeline for when a covered 
                person shall no longer serve as an officer or member of 
                any board of any for-profit association, corporation, 
                or other entity.
    (b) Enforcement.--Whoever knowingly fails to comply with this Act 
shall be subject to a civil penalty of not less than 10 percent of the 
value of the covered investment that was purchased or sold or the 
security in which a net short position was created in violation of this 
Act, as applicable.
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