119-hr1599

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1599 Introduced in House

    (IH) ]

<DOC>

119th CONGRESS
 1st Session
 H. R. 1599

 To amend title 5, United States Code, to prohibit transactions 
 involving certain financial instruments by senior Federal employees, 
 their spouses, or dependent children, and for other purposes.

_______________________________________________________________________

 IN THE HOUSE OF REPRESENTATIVES

 February 26, 2025

 Mr. Cloud (for himself, Mr. Golden of Maine, Mr. Self, Mr. Brecheen, 
and Mrs. Cammack) introduced the following bill; which was referred to 
 the Committee on Oversight and Government Reform, and in addition to 
 the Committee on Ways and Means, 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

_______________________________________________________________________

 A BILL

 To amend title 5, United States Code, to prohibit transactions 
 involving certain financial instruments by senior Federal employees, 
 their spouses, or dependent children, 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 ``Dismantling Investments in Violation 
of Ethical Standards through Trusts Act''.

SEC. 2. PROHIBITING TRANSACTIONS AND OWNERSHIP OF CERTAIN FINANCIAL 
 INSTRUMENTS BY SENIOR FEDERAL EMPLOYEES, THEIR SPOUSES, 
 OR DEPENDENT CHILDREN.

    (a) In General.--Chapter 13 of title 5, United States Code, is 
amended by adding after subchapter III the following:

 ``SUBCHAPTER IV--RESTRICTIONS REGARDING FINANCIAL INSTRUMENTS

``

Sec. 13151. Definitions
 ``In this subchapter:
 ``

    (1) Covered financial instrument.--
 ``
        (A) In general.--The term `covered financial 
 instrument' means--
 ``
            (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)); and
 ``
            (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' does not include--
 ``
            (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 child of a 
 senior Federal employee.
 ``

    (2) Qualified blind trust.--The term `qualified blind 
 trust' has the meaning given the term in 

section 13104.
 ``

    (3) Senior federal employee.--The term `senior Federal 
 employee' means any individual occupying a Senior Executive 
 Service position (as that term is defined in 

section 3132).
 ``

    (4) Supervising ethics office.--The term `supervising 
 ethics office' has the meaning given the term in 

section 13101.
``

Sec. 13152. Prohibition on certain transactions and holdings 
 involving covered financial instruments
 ``

    (a) Prohibition.--Except as provided in subsection

    (b) , a senior 
Federal employee, their spouse, or their dependent children may not, 
during the term of service of the employee, hold, purchase, or sell any 
covered financial instrument.
 ``

    (b) Exceptions.--The prohibition under subsection

    (a) does not 
apply to--
 ``

    (1) a sale by a senior Federal employee, their spouse, or 
 their dependent child that is completed by the date that is--
 ``
        (A) for an employee serving on the date of 
 enactment of this title, 180 days after that date of 
 enactment; and
 ``
        (B) for any employee who commences service as an 
 employee after the date of enactment of this title, 180 
 days after the first date of the initial term of 
 service;
 ``

    (2) a covered financial instrument held in a qualified 
 blind trust operated on behalf of, or for the benefit of, a 
 senior Federal employee, their spouse, or their dependent 
 child; or
 ``

    (3) a covered financial instrument exempted from coverage 
 under 

section 208 of title 18 pursuant to 

section 2640.202 of 
 title 5, Code of Federal Regulations (or any successor 
 regulation).
 ``
            (c) Application of Certificate of Divestiture Program.--For 
purposes of 

section 1043 of the Internal Revenue Code of 1986--
 ``

    (1) this section shall be treated as a Federal conflict 
 of interest statute; and
 ``

    (2) any person required to dispose of any property by 
 reason of this section shall be treated as an eligible person.
 ``
            (d) Penalties.--
 ``

    (1) Disgorgement.--A senior Federal employee, their 
 spouse, or their dependent child shall disgorge to the general 
 fund of the Treasury 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 senior Federal employee, 
 their spouse, or their dependent child.
 ``

    (3) Fines.--A senior Federal employee who 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 office under 

section 13153.
``

Sec. 13153. Certification of compliance
 ``

    (a) In General.--Not less frequently than annually, each senior 
Federal employee shall submit to the supervising ethics office a 
written certification that the employee, their spouse, or their 
dependent child has achieved compliance with the requirements of this 
title.
 ``

    (b) Publication.--The supervising ethics office shall publish 
each certification submitted under subsection

    (a) on a publicly 
available website.
``

Sec. 13154. Authority of supervising ethics office
 ``

    (a) In General.--The supervising ethics office may implement and 
enforce the requirements of this subchapter, including by--
 ``

    (1) issuing--
 ``
        (A) for applicable senior Federal employees--
 ``
            (i) rules governing that implementation; 
 and
 ``
            (ii) 1 or more reasonable extensions to 
 achieve compliance with this subchapter, if the 
 supervising ethics office determines that an 
 employee 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 senior Federal employees under 

section 13153

    (a) ; and
 ``

    (3) assessing civil fines against any senior Federal 
 employee who is in violation of this subchapter, subject to 
 subsection

    (b) .
 ``

    (b) Requirements for Civil Fines.--
 ``

    (1) Amount.--A fine imposed under this section against a 
 senior Federal employee shall be equal to the greater of--
 ``
        (A) $1,000, or
 ``
        (B) an amount equal to 10 percent of the greatest 
 dollar value of the applicable covered financial 
 instrument during any period that such instrument was 
 held by the applicable senior Federal employee or their 
 spouse or dependent child (as the case may be).
 ``

    (2) In general.--Before imposing a fine pursuant to this 
 section, the supervising ethics office shall provide to the 
 applicable senior Federal employee--
 ``
        (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 subchapter.
 ``

    (3) Publication.--The supervising ethics office shall 
 publish on a publicly available website a description of--
 ``
        (A) each fine assessed 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

    (2)
        (B)
            (i) relating to the 
 assessment.
 ``

    (4) Appeal.--A senior Federal employee may appeal to the 
 supervising ethics office a fine assessed under this section 
 during the 30-day period beginning on the date the fine is so 
 assessed.
``

Sec. 13155. Audit by Government Accountability Office
 ``Not later than 2 years after the date of enactment of this 
subchapter, the Comptroller General of the United States shall--
 ``

    (1) conduct an audit of the compliance by senior Federal 
 employees with the requirements of this subchapter; and
 ``

    (2) submit to each supervising ethics office a report 
 describing the results of the audit conducted under paragraph

    (1) .''.

    (b) Application.--The amendments made by subsection

    (a) shall apply 
to individuals described in 

section 13152

    (a) of title 5, United States 
Code, (as added by subsection

    (a) ) beginning on the date that is 12 
months following the date of enactment of this Act.
            (c) Additional Employees.--

Section 13121
            (c) (1) of title 5, United 
States Code, is amended by inserting ``up to 100'' after ``appoint''.
            (d) Funding.--The Director of the Office of Management and Budget 
may transfer such funds as the Director considers appropriate, to be 
derived from unobligated amounts available for executive branch 
programs identified by the Director to be duplicative, to the Office of 
Government Ethics for the purpose of carrying out this Act, to remain 
available until the date that is 5 years following the date of the 
enactment of this Act.
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