Ending Trading and Holdings in Congressional Stocks (ETHICS) Act

Bill Number: H.R. 4890
Origin Chamber: House
Congress: 119th Congress, Session 1
Policy Area: Congress
Status: Introduced
Latest Action: 2025-08-05: Referred to the Committee on House Administration, and in addition to the Committees on Oversight and Government Reform, and the Judiciary, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
Last Updated: 2025-12-10T09:05:57Z

AI-Generated Summary

Purpose of the Legislation

The Ending Trading and Holdings in Congressional Stocks (ETHICS) Act aims to reduce potential conflicts of interest by prohibiting Members of Congress, their spouses, and dependent children from trading or owning certain financial investments, such as stocks. It requires these individuals to either sell such assets or place them in a "qualified blind trust" (a trust managed independently by a trustee without the beneficiary's knowledge of its holdings to avoid influence). The goal is to ensure that congressional decisions are not influenced by personal financial gains.

Key Provisions

Definitions:
"Covered investments" include stocks (securities), commodities, futures, derivatives (like options), and similar economic interests held directly or indirectly (e.g., through funds or trusts, excluding qualified blind trusts). Exclusions apply to diversified mutual funds, exchange-traded funds, U.S. Treasury securities, certain spousal compensation from primary jobs, government retirement plans, municipal bonds, small business interests (if no conflict), and specific Alaska Native Claims assets.
"Covered persons" are Members of Congress, their spouses, and dependent children (under 19 and financially dependent per tax rules).
Other terms include "qualified blind trust" (an approved trust with an independent financial institution trustee) and "illiquid investment" (e.g., private fund interests, which cannot be placed in blind trusts and must be sold when possible).

Ban on Trading Covered Investments:
Effective immediately upon enactment, Members of Congress cannot purchase covered investments.
Within 90 days, they cannot sell them (except for optional divestment windows for current or new members).
Spouses and dependent children face the same purchase/sale ban after a specified effective date.
Jointly owned investments count toward the Member's obligations.
Exceptions allow divestment directed by ethics offices or for small holdings (up to $10,000) managed by a guardian for dependent children.

Handling Existing and Future Owned Investments:
Members must certify within 60 days (published online) that all covered investments will be divested or placed in a qualified blind trust within 120 days (extensions up to 150 days possible).
Blind trusts require sale of original ("initial") assets within 120 days; trustees must notify ethics offices upon completion (without revealing details).
No new acquisitions allowed during service, except inheritances (must comply within 120 days, with extensions).
Family trusts may be exempt if no covered person controls them.
A 90-day "cooling-off" period after leaving Congress prevents dissolving trusts or regaining control.
Illiquid investments must be sold within 90 days of becoming sellable.

Reporting and Transparency:
Ethics offices must publish certifications, trust agreements, asset schedules, extensions, and penalties online.
Trustees report any unauthorized knowledge of trust holdings; Members report trust-related documents within 30 days.
Covered persons must report federal payments (e.g., grants, loans) received within 30-45 days.
Amends the STOCK Act (a 2012 law on financial disclosures) to impose $500 fines for late transaction reports and require electronic filing with searchable public access (e.g., by filer name, asset, transaction details) within 18 months.

Enforcement:
Supervising ethics offices (e.g., for House/Senate) issue notices for noncompliance and impose civil penalties: the greater of a Member's monthly salary or 10% of the undivested investment's value, every 30 days.
Attorney General can sue for improper communications about trusts (up to $10,000 or 1% of trust value per violation).
Ethics offices develop rules, forms, and guidelines; fines go to the Treasury.

Effective Date and Construction:
Applies to new congressional terms starting on or after January 31, 2023.
Does not prohibit owning/trading diversified mutual funds or exchange-traded funds.
Includes severability clause: if any part is ruled unconstitutional, the rest remains in effect.

Significant Changes to Existing Law

Adds a new Subchapter IV to Chapter 131 of Title 5, U.S. Code (Ethics in Government), creating mandatory divestment/blind trust rules specifically for congressional members' families—previously, blind trusts were optional and less strictly enforced.
Amends the STOCK Act to add fines for reporting failures (previously, penalties were discretionary or absent) and mandates advanced electronic, searchable public access to disclosures (building on 2012 requirements for online availability).
Makes technical updates to related laws (e.g., Lobbying Disclosure Act, Securities Exchange Act) to align definitions and remove outdated references.
Introduces stricter trustee qualifications (must be financial institutions, not lawyers or brokers) and communication limits for blind trusts.

Potential Impacts

On Government Agencies: Supervising ethics offices (e.g., House/Senate committees) will face increased workloads for certifications, reviews, extensions, and online publications, requiring new procedures and resources within one year.
On Citizens: Enhances transparency through better public access to financial data, potentially building trust in government by reducing perceptions of insider trading; no direct costs or benefits to the general public, but could indirectly affect policy decisions if conflicts are minimized.
On International Relations: Minimal to none; focuses on domestic ethics without addressing foreign investments or trade.

Main Stakeholders Affected

Members of Congress: Directly restricted in personal finances, requiring divestment or trust setup, with penalties for noncompliance.
Spouses and Dependent Children: Limited in trading/owning investments; small allowances for dependents, but overall family assets impacted.
Ethics Offices and Trustees: Gain enforcement duties, reporting obligations, and approval roles; financial institutions may see more business as required trustees.
Public and Watchdog Groups: Benefit from increased transparency and searchable data, enabling oversight of potential conflicts.
Federal Agencies: Involved in reporting payments (e.g., grants) and Attorney General enforcement.

Notable Legal, Constitutional, or Political Implications

Legal: Strengthens ethics enforcement under existing disclosure laws but introduces civil penalties without criminal ones, relying on ethics offices rather than courts for initial actions. Could lead to disputes over "covered investment" definitions or divestment timelines.
Constitutional: May raise due process concerns (e.g., if divestment is seen as forcing asset sales without fair value), but likely upheld as a reasonable regulation on public officials to prevent corruption, similar to prior ethics rules. No First Amendment issues apparent, as it targets financial conflicts, not speech.
Political: Promotes bipartisanship (introduced by diverse sponsors) to address public concerns over stock trading scandals, potentially improving Congress's image. Could deter candidates with significant investments from running or influence policy by removing personal financial incentives; severability protects against partial invalidation.

This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.

Sponsor

Rep. Krishnamoorthi, Raja [D-IL-8]

Cosponsors (16)

Rep. Cloud, Michael [R-TX-27], Rep. Ocasio-Cortez, Alexandria [D-NY-14], Rep. Neguse, Joe [D-CO-2], Rep. Riley, Josh [D-NY-19], Rep. Kiggans, Jennifer A. [R-VA-2], Rep. Magaziner, Seth [D-RI-2], Rep. Scanlon, Mary Gay [D-PA-5], Rep. Tonko, Paul [D-NY-20], Rep. Levin, Mike [D-CA-49], Rep. Lawler, Michael [R-NY-17], Rep. Khanna, Ro [D-CA-17], Rep. Deluzio, Christopher R. [D-PA-17], Rep. Self, Keith [R-TX-3], Rep. Fitzpatrick, Brian K. [R-PA-1], Rep. Moulton, Seth [D-MA-6], Rep. Joyce, John [R-PA-13]

Recent Actions

2025-08-05: Referred to the Committee on House Administration, and in addition to the Committees on Oversight and Government Reform, and the Judiciary, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
2025-08-05: Referred to the Committee on House Administration, and in addition to the Committees on Oversight and Government Reform, and the Judiciary, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
2025-08-05: Referred to the Committee on House Administration, and in addition to the Committees on Oversight and Government Reform, and the Judiciary, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
2025-08-05: Introduced in House
2025-08-05: Introduced in House

Bill Versions

Ending Trading and Holdings in Congressional Stocks (ETHICS) Act — issued 2025-08-05 — PDF (35 pages)