Stop Insider Trading Act

Summary#

This bill would add a new subchapter to the federal ethics rules for Congress. It defines "covered individuals" as Members of Congress, their spouses, and dependent children. It defines "covered investments" to include most publicly traded securities and related derivatives, with specific exclusions for certain funds, small business interests, and some trusts.

The bill would bar covered individuals from purchasing covered investments while serving in Congress. It would also require that covered individuals file and publicly disclose a notice of intent at least 7 calendar days and not more than 14 calendar days before any planned sale of a covered investment. The notice must say the projected sale date, describe the sale, and list the number of shares. Notices must be filed with the Clerk of the House or the Secretary of the Senate and made public on the appropriate website. Notices may be withdrawn before the end of the notice period if the sale no longer occurs.

There are limited exceptions: the purchase and sale rules do not apply to some transactions by a spouse or dependent that are made on behalf of others or as part of employment or fiduciary duties, and they do not apply to transactions that reinvest dividends. The supervising ethics office can issue guidance about the rules.

If a covered individual violates the rules, the supervising ethics office may direct assessment of a fee and require sale of any covered investment purchased in violation. The fee is calculated as $2,000 or 10% of the transaction value (whichever is greater) plus any net gain realized from the investment while the person was a covered individual. Members cannot pay these fees from specified official accounts or campaign contributions. Collected fees are deposited in the general fund of the Treasury. The ethics office may refer a member to the Attorney General if the member resigns or retires before paying an assessed fee. The bill would take effect 180 days after enactment.

What it means for you#

• If you are a Member of Congress, your spouse, or a dependent child, the bill would generally stop you from buying publicly traded securities or related instruments while you are serving.
• To sell a covered investment, you (or the Member on behalf of a spouse or dependent) must file a public notice 7–14 days before the sale with the Clerk of the House or Secretary of the Senate. The notice must list the sale date, describe the sale, and state the number of shares.
• Certain transactions by spouses or dependents tied to employment or fiduciary duties, and dividend reinvestments, are exceptions.
• Violations can lead to a required sale of the purchased investment and a fee set by the supervising ethics office. Members may not use certain official accounts or campaign donations to pay these fees.
• The rules would begin to apply 180 days after the bill becomes law.

Expenses#

No publicly available information on estimated budgetary costs or savings from this bill. The bill would require that fees assessed for violations be deposited in the Treasury as miscellaneous receipts. The bill does not include cost estimates or appropriations.

Proponents' View#

No publicly available information.

Opponents' View#

No publicly available information.