Section 1. Findings and Purpose

Widespread public concern over congressional trading, evidenced by 2023–2025 media reports and bipartisan legislative proposals (e.g., ETHICS Act), underscores the need for reform.

The Stop Trading on Congressional Knowledge (STOCK) Act of 2012 has failed to deter abuse: no prosecutions have occurred despite widespread violations, and penalties remain trivial ($200 fine for late reports).

From 2022–2025, over 20% of congressional trades raised potential conflicts of interest, undermining public trust in legislative integrity (New York Times, 2022–2025).

Judges, senior executive officials, and federal employees face stricter trading restrictions than members of Congress and their senior staff, creating a double standard.

Senior congressional staff, such as chiefs of staff and legislative directors, often have access to non-public information, and their trading has led to conflicts (e.g., 2024 reports of aides trading in committee-related sectors).

Senior staff access to non-public information creates similar conflict risks as lawmakers, as evidenced by 2024 trading scandals, justifying equivalent restrictions.

Spousal restrictions are narrowly tailored to prevent circumvention, as seen in 2023–2025 spousal trading scandals (e.g., $38.6M in tech trades), preserving property rights via Ultra-Blind Trusts. Spousal trading bans are justified by documented circumvention, with 2023–2025 scandals (e.g., $38.6M in tech trades by Rep. Pelosi’s spouse) showing access to non-public information, undermining trust. The spousal ban is not a taking under the Fifth Amendment, as Ultra-Blind Trusts and permitted investments preserve economic value, and public trust (86% support, 2023) justifies regulation (Penn Central Transportation Co. v. New York City, 438 U.S. 104, 1978).

Cryptocurrencies are included in the trading ban due to their use in insider trades (e.g., 2021 Bitcoin trades by Sen. Lummis during regulatory talks), posing equivalent conflict risks to stocks, as supported by SEC precedent (SEC v. Capital Gains Research Bureau, 375 U.S. 180, 1963).

Ultra-Blind Trusts are the least restrictive effective means to prevent conflicts, as qualified blind trusts allow initial asset knowledge, enabling circumvention (e.g., 2022 ethics reports).

Restrictions on stock trading by public officials and their spouses are constitutional, as they serve a compelling public interest in preventing conflicts of interest and are narrowly tailored to avoid circumvention (SEC v. Capital Gains Research Bureau, 375 U.S. 180, 1963).

The trading ban does not restrict expressive conduct under the First Amendment, as it targets conflicts of interest from non-public information, not investment choices, consistent with SEC v. Capital Gains Research Bureau (1963).

Public trust is essential to the legitimacy of democratic governance; even the appearance of self-dealing erodes this trust.

Purpose: To eliminate financial conflicts of interest by banning individual stock trading by members of Congress, their spouses, and senior staff, ensuring transparency, accountability, and dignity in public service.

Section 2. Definitions

Individual Stock: Any equity security in a single company, including options, derivatives, futures contracts, and cryptocurrencies.

Covered Individual: Any member of Congress, their spouse, and senior congressional staff (e.g., chiefs of staff, legislative directors, or equivalent roles with documented regular access to confidential legislative or market-sensitive information, as determined by the Office of Congressional Ethics based on criteria including direct participation in closed briefings, legislative drafting, or regulatory oversight). The Office of Congressional Ethics shall publish and update annually a public list of covered staff positions within 60 days of enactment and within 30 days of any staff role changes, based on documented access.

Qualified Ultra-Blind Trust: A trust in which (a) assets are managed by an independent trustee selected by an ethics panel with no input from the covered individual, (b) the covered individual has no knowledge of or communication about specific holdings, and (c) initial assets are divested within 180 days of assuming office or employment.

Permitted Investments: Diversified index funds, mutual funds, U.S. Treasury securities, and other non-conflict, widely held investment vehicles.

Section 3. Prohibitions and Transition Support

No covered individual may purchase, sell, or trade individual stocks, options, derivatives, futures contracts, or cryptocurrencies while serving in or employed by Congress.

Covered individuals must divest prohibited holdings within 180 days of assuming office or employment, either by sale or placement in a Qualified Ultra-Blind Trust.

To support compliance, the Office of Congressional Ethics shall provide free financial counseling, funded through existing Office of Congressional Ethics budgets, prioritized for those divesting complex portfolios, with guidelines issued within 90 days of enactment.

Covered individuals facing divestment may appeal to the OCE within 30 days if undue hardship is demonstrated (e.g., unique financial constraints supported by documented evidence, limited to one appeal per person). Frivolous appeals (e.g., unsupported claims) shall incur sanctions up to $5,000, per OCE determination, with public disclosure of appeal outcomes.

Section 4. Disclosure and Transparency

All permitted transactions by covered individuals must be disclosed publicly within 7 days in a machine-readable format, maintained by the Government Accountability Office as the independent oversight authority.

All disclosures must be searchable and accessible to the public without cost via a dedicated online portal.

Section 5. Enforcement and Penalties

Any violation shall result in: a. Forfeiture of illicit gains, as calculated by the Securities and Exchange Commission (SEC). b. Civil penalties: up to $10,000 for unintentional violations (e.g., clerical errors), up to three times the profit gained or loss avoided for intentional violations. ‘Intentional violations’ means trades with documented knowledge of non-public information (e.g., from closed briefings), per SEC findings. Penalties are proportionate to harm (20% conflicted trades, 2022–2025), consistent with SEC v. Capital Gains Research Bureau (1963). c. Automatic referral to the Department of Justice (DOJ) and SEC for intentional violations. d. Loss of committee leadership positions for repeat intentional offenders. e. The SEC shall investigate trades by entities (e.g., LLCs, trusts) or individuals (e.g., immediate family, associates) linked to covered individuals, defined as: (1) 10% or greater ownership/control by the covered individual or spouse; (2) immediate family members (children, parents, siblings); or (3) documented financial arrangements (e.g., shared accounts) suggesting circumvention, with findings reported to GAO audits.

Section 6. Oversight

The Government Accountability Office (GAO) shall conduct annual audits of compliance and publish findings in a public report.

An independent ethics panel, appointed by the GAO, shall oversee Qualified Ultra-Blind Trust approvals and trustee selections. The ethics panel shall consist of 5 members with no prior congressional employment, selected by the GAO based on expertise in ethics or finance, with conflicts of interest (e.g., direct financial ties to covered individuals, excluding minor donations under $500) disclosed publicly. Frivolous bias challenges shall incur sanctions up to $5,000.

Section 7. State-Level Harmonization and Review

The Department of the Treasury shall provide grants of up to $500,000 per state, not to exceed $25 million total, to support the adoption of comparable stock-trading bans for state legislatures. Grants shall fund: (a) public, machine-readable disclosure systems for legislators’ transactions; (b) compliance training and counseling for divestment; and (c) ethics oversight programs (e.g., state ethics commissions). Grants are contingent on establishing public disclosure systems and annual compliance reporting. States denied grants may appeal to the Department of the Treasury, with decisions reviewed publicly within 60 days. States receiving grants must submit annual financial audits to the Department of the Treasury, with funds misused (e.g., for non-disclosure purposes) subject to repayment and exclusion from future grants. The Treasury shall publish audit findings publicly within 90 days. Grants are voluntary opt-in, supporting the federal interest in national market stability and public trust, consistent with South Dakota v. Dole (483 U.S. 203, 1987). ‘Harmonized bans’ means comparable (not identical) state-level bans, with flexibility for local needs. Grants advance the federal interest in national market stability and public trust ($1.7T gridlock losses, 2023; 15% state conflicts, 2024), consistent with Congress’s Spending Clause authority (South Dakota v. Dole, 1987).

A pilot program shall be established to support 5 states in implementing harmonized bans, with results evaluated and shared publicly within 2 years to inform broader adoption.

The GAO shall conduct a comprehensive review every 6 years to assess the Act’s effectiveness, recommend updates for new asset classes or trading vehicles, and publish a public report to guide future reforms.