House Democrats have released their long-awaited proposal to ban stock trading by members of Congress, senior government officials, and U.S. Supreme Court justices, with the measure seeking to cut conflicts of interest, increase transparency around enforcement, and make penalties for noncompliance more painful.
The text of the legislation, “Combatting Financial Conflicts of Interest in Government Act,” seeks to ban a range of officials—in Congress, the executive branch, the Supreme Court, and at the Federal Reserve—from trading or owning investments in instruments including stocks, commodities, futures, and cryptocurrencies.
The draft legislation would force individuals covered by the measure to divest themselves of these holdings or put them in a qualified blind trust.
The House Press Gallery’s Twitter account said in a Sept. 22 statement that the proposed legislation could be considered in the House as early as this week.
That statement came on the same day that Rep. Zoe Lofgren (D-Calif.), chair of the Committee on House Administration, outlined a broad framework for the legislation in a letter to fellow Democrats. The committee was tasked with reviewing deficiencies in the current financial disclosure system and proposing a fix.
“Following that review, I believe that a meaningful and effective plan to combat financial conflicts of interest could help restore the public’s faith and trust that our public servants act in the public interest,” Lofgren wrote.
Pressure has been growing for some time to overhaul the current financial disclosure system after media scrutiny of potential conflicts of interest in trading by U.S. government officials and their families.
A recent analysis found that over a three-year span, nearly one-fifth of the members of Congress or their family members bought or sold financial assets that showed possible conflicts of interest.
“These stories undermine the American people’s faith and trust in the integrity of public officials and our federal government. Members of the public may ask, are our public officials acting in the public interest or their private financial interest?” Lofgren wrote in the letter.
The draft legislation that was released on Sept. 27 by the House Administration Committee mirrors the framework Lofgren outlined, and seeks to amend the Ethics in Government Act of 1978.
Individuals covered by the provisions of the legislation would be allowed to invest in holdings that don’t present the same potential for conflicts of interest as stocks, such as diversified mutual funds, exchange-traded funds, and U.S. government securities.
The legislation also seeks to impose more painful penalties for violations, which under current law are a paltry $200 for every 30-day period of noncompliance. The new proposal seeks to raise the penalty to $500 while calling for greater transparency regarding enforcement.
The measure also seeks to require officials to provide more detail on disclosure forms. Current law allows lawmakers to disclose values of trades in broad ranges, such as $1 million to $5 million.
Under the new proposal, they would have to provide more granularity by providing a rounded value for high-value assets, transactions, and liabilities.
Reporting from The Epoch Times.