H.R. 4036: No Shorting America Act

This bill, known as the No Shorting America Act, aims to prevent certain individuals from engaging in short sales of financial investments. Specifically, it targets Members of Congress, as well as their spouses and dependents, by prohibiting them from executing short sales of covered financial instruments.

Definitions and Coverage

• Covered Financial Instrument: This term refers to investments such as securities, security futures, commodities, and any synthetic derivatives like options or warrants.
• Covered Individuals: This includes any Member of Congress, their spouses, and their dependents.
• Short Sale: A transaction where an investor borrows a financial instrument and sells it, hoping to buy it back later at a lower price.

Key Provisions of the Bill

• Prohibition on Short Selling: Covered individuals are not allowed to engage in short sales involving any covered financial instrument issued by companies listed on national stock exchanges.
• Tax Implications: Losses incurred from illegal short sales cannot be deducted from income taxes owed by covered individuals.
• Compliance Requirements: Members of Congress must submit a pledge to comply with these regulations to a supervising ethics office and must provide any requested information demonstrating compliance.
• Certificates of Compliance: Those complying with the regulations will receive a certificate, and this information will be made publicly accessible online.

Enforcement Mechanisms

• Referral for Non-Compliance: The ethics office will refer cases of non-compliance to the Attorney General.
• Civil Penalties: If a covered individual knowingly violates the prohibition, civil penalties up to $50,000 may be assessed by a court. There are restrictions on how these penalties can be paid, prohibiting the use of certain government funds or political committee funds.

Conclusion of the Bill Requirements

This bill is designed to enhance the integrity of financial markets and prevent conflicts of interest by restricting Members of Congress and their families from profiting from financial downturns through short selling.

Relevant Companies

None found.