House Democrats introduced legislation Tuesday that would prohibit federal officials from trading stocks in an effort to curb potential conflicts of interest.
The bill, titled Combatting Financial Conflicts of Interest in Government Act, would ban congressional lawmakers and their spouses and dependent children, federal judges, Supreme Court justices, the president, vice president, members of the Federal Reserve System's Board of Governors and others from trading or owning investments in securities, commodities, futures,cryptocurrencies or other digital assets.
Those who are not allowed to trade stocks would have to divest their holdings or put them into a qualified blind trust.
The legislation allows officials to place their money in other investments, including diversified mutual funds and exchange-traded funds, US Treasury bills, bonds and notes, and state and municipal bonds.
Officials and family members covered under the bill would have to comply with the measure within 180 days of it being enacted, or when they take office.
Those who are harmed by trading or ownership restrictions will be fined $1,000. If the violation continues beyond 30 days, they would be fined an additional $1,000 plus an amount equal to 10% of the covered investment that is the subject of the violation at the beginning of the additional 30 day period. Individuals who do not file their financial reports on time would be subject to a $500 fine, up from the current $200. For each subsequent 30 days, they would have to pay an additional $500 fine plus 10 percent of the value of transactions that should have been included in the report.
The attorney general would have the authority to bring a civil action against people who are knowingly and willfully making prohibited transactions.
House Speaker Nancy Pelosi, D-Calif. initially opposed the idea of a ban before directing the Committee on House Administration Chair Zoe Lofgren, D-Calif. in February to draft the legislation. The speaker's husband, Paul Pelosi, is a venture capitalist and one of the most active trading participants among congressional spouses.
A bipartisan group of House lawmakers wrote a letter to leadership earlier this month, asking for a vote on a stock trading reform bill.
Pelosi said a bill would likely come to the floor this month, but the House is only set to be in session from Wednesday evening to Friday afternoon, and government funding legislation is also on the calendar.
The bill faces other hurdles, including voiced opposition to a trading ban by House Majority Leader Steny Hoyer, D-Md. Although his office has said he will not make an official decision until he sees the final version of the legislation.
Some notable Republicans in both chambers of Congress supported the idea, even though the trading ban was introduced by House Democrats. Texas Rep. Chip Roy and Missouri Sen. Josh Hawley have both sponsored or co-sponsored bills calling for a trading ban. House Minority Leader Kevin McCarthy said earlier this year that he would consider blocking members of Congress from trading stocks if Republicans take over the House.
The Senate is unlikely to take action on its ban on trading until after the midterm elections in November.