HR7008-119

What This Bill Does

The Stop Insider Trading Act adds a new subchapter to title 5 restricting covered investments by congressional families. A covered individual is a Member of Congress, a congressional spouse, or a dependent child of a Member. A covered investment is a publicly traded company security or comparable economic interest acquired through derivatives, options, warrants, or similar synthetic means.

The bill bans covered individuals from purchasing covered investments. It still allows sales, but a Member must file a notice of intent to sell at least 7 and no more than 14 calendar days before the sale. The notice must identify the projected sale date, describe the sale, and list the number of shares, and it must be filed with the House Clerk or the Secretary of the Senate and posted publicly. If the sale does not happen, the Member must withdraw the notice.

The bill excludes diversified investment funds, certain funds concentrated only in the United States or the Member's home state, small business concern interests, and trusts where covered individuals cannot direct the trustee. Enforcement is handled by the supervising ethics office. Violators face the greater of $2,000 or 10 percent of the transaction value plus any net gain, and unlawful purchases must be sold. Members cannot pay the fee from official office allowances, campaign funds, or office-support donations, and unpaid penalties may be referred to the Justice Department.

Who Benefits and How

Public investors benefit because Members and their immediate families would no longer be able to buy individual public-company securities while holding congressional office. Congressional ethics offices benefit from a specific penalty formula and forced-sale remedy instead of relying only on disclosure rules. The House Clerk and Secretary of the Senate benefit from a defined notice workflow for public sale disclosures. Federal taxpayers benefit because penalty proceeds are deposited in the Treasury. Diversified fund products benefit because the bill channels congressional families toward investment vehicles less likely to create company-specific conflicts.

Who Bears the Burden and How

Members of Congress bear the central burden because they lose authority to buy covered investments and must publicly disclose intended sales before executing them. Congressional spouses and dependent children bear the same investment restrictions unless a statutory exception applies. Supervising ethics offices must calculate transaction fees, determine net gains, direct forced sales, and refer unpaid penalties to the Justice Department. The House Clerk and Secretary of the Senate must receive, publish, and track sale notices. Small-business and trust carveouts require compliance judgments about whether the investment fits an exception.

Key Provisions

• Defines covered individuals as Members of Congress, congressional spouses, and dependent children.
• Defines covered investments to include public-company securities and comparable derivative interests.
• Exempts diversified funds, certain geographically concentrated funds, small business concern interests, and qualifying trusts.
• Prohibits covered individuals from purchasing covered investments.
• Requires advance public notice 7 to 14 days before a covered investment sale.
• Requires notices to be filed with the House Clerk or Secretary of the Senate and posted publicly.
• Establishes penalties equal to the greater of $2,000 or 10 percent of transaction value plus net gains.
• Requires forced sale of investments purchased in violation of the ban and allows Justice Department referral.