Preventing Elected Leaders from Owning Securities and Investments (PELOSI) Act
- Bill Number
- H.R. 3388
- Origin Chamber
- House
- Congress
- 119th Congress, Session 1
- Policy Area
- Congress
- Status
- Introduced
- Latest Action
- 2025-05-14: Referred to the House Committee on House Administration.
- Last Updated
- 2025-12-05T21:58:00Z
AI-Generated Summary
Purpose of the Legislation
The Preventing Elected Leaders from Owning Securities and Investments (PELOSI) Act aims to prevent conflicts of interest and potential insider trading by prohibiting Members of Congress and their spouses from holding, buying, or selling certain types of financial investments during the member's term of service. It seeks to promote ethical conduct and public trust in government by restricting access to financial instruments that could be influenced by non-public information gained through official duties.
Key Provisions
- Definitions:
- Covered financial instrument: Includes stocks (securities), futures contracts, commodities, and similar economic interests obtained through derivatives (like options or warrants). Excludes diversified mutual funds, exchange-traded funds (ETFs), U.S. Treasury securities, and income from a spouse's or dependent child's primary job.
- Other terms, such as "dependent child" and "Member of Congress," align with existing ethics definitions. "Supervising ethics committee" refers to the Senate's Select Committee on Ethics or the House's Committee on Ethics.
- Prohibition on Transactions:
- Members of Congress and their spouses cannot hold, purchase, or sell covered financial instruments while the member is in office.
- Exception: Sales must be completed within 180 days of the law's enactment (for current members) or the start of a new term (for future members).
- Penalties:
- Violators must return (disgorge) any profits from prohibited transactions to the U.S. Treasury.
- Civil fines can be imposed by ethics committees for ongoing violations.
- Compliance Certification:
- Members must submit an annual written certification of compliance to their ethics committee.
- Certifications are published on a public website for transparency.
- Enforcement by Ethics Committees:
- Committees can issue rules, provide guidance on what qualifies as a covered instrument, and grant reasonable extensions for good-faith divestment efforts.
- Before fining, committees must give written notice of violations, allow a hearing, and provide 30 days to comply.
- Fines equal 10% of the value of undivested instruments, assessed every 30 days during noncompliance, and details of fines (including reasons and hearing outcomes) must be published online.
- Members can appeal fines via a privileged vote on the Senate or House floor.
- Government Accountability Office (GAO) Audit:
- Within 2 years of enactment, the GAO must audit compliance by Members of Congress and report findings to the ethics committees.
Significant Changes to Existing Law
- Adds a new Subchapter IV ("Banning Insider Trading in Congress") to Chapter 131 of Title 5, United States Code, which governs ethics in government.
- Introduces a blanket prohibition on specific financial holdings and transactions for Members of Congress and spouses, going beyond current disclosure requirements (like financial reports under the Ethics in Government Act).
- Updates the table of sections in Chapter 131 and removes redundant definitions from filing requirements in Section 13103(f), streamlining ethics reporting without altering core disclosure rules.
Potential Impacts
- On Government Agencies: Ethics committees gain expanded enforcement powers, including fine assessments and public reporting, increasing their workload. The GAO will conduct a one-time audit, potentially informing future oversight. The Treasury receives disgorged profits, adding minor revenue.
- On Citizens: Enhances transparency through public certifications and fine disclosures, potentially building trust by reducing perceptions of favoritism in investments. No direct financial impact on the public, but it may indirectly affect policy decisions if members' investment choices are limited.
- On International Relations: No apparent impact, as the bill focuses on domestic ethics for U.S. lawmakers.
Main Stakeholders Affected
- Members of Congress and Their Spouses: Directly restricted in personal investments, requiring divestment of certain assets within 180 days.
- Supervising Ethics Committees: Responsible for implementation, enforcement, hearings, fines, and public disclosures.
- Government Accountability Office: Tasked with auditing compliance.
- U.S. Treasury: Receives profits from violations.
- The Public: Benefits from increased transparency and accountability measures.
Notable Legal, Constitutional, or Political Implications
- Legal: Strengthens existing ethics frameworks by adding specific prohibitions and enforcement tools (e.g., automatic fines and appeals), but relies on committee discretion for extensions and guidance, which could lead to interpretive disputes. "Disgorgement" means returning ill-gotten gains, a common remedy in securities law.
- Constitutional: May face challenges under the Takings Clause (Fifth Amendment) if divestment is viewed as government seizure of property without compensation, though it likely withstands scrutiny as a reasonable regulation on public officials' conduct (similar to stock trading bans for executives). No clear free speech issues, as it targets actions (transactions) rather than expression.
- Political: Promotes bipartisan ethics reform by addressing insider trading concerns, but the acronym (PELOSI) references a prominent politician, potentially signaling partisan intent despite the bill's neutral language. Could influence congressional behavior by limiting wealth-building opportunities tied to office.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Cosponsors (1)
Rep. Steube, W. Gregory [R-FL-17]
Recent Actions
- 2025-05-14: Referred to the House Committee on House Administration.
- 2025-05-14: Introduced in House
- 2025-05-14: Sponsor introductory remarks on measure. (CR H2041-2042)
- 2025-05-14: Introduced in House
Bill Versions
- Preventing Elected Leaders from Owning Securities and Investments (PELOSI) Act — issued 2025-05-14 — PDF (9 pages)