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H.R. 7008: Stop Insider Trading Act

The bill introduced as the Stop Insider Trading Act aims to impose stricter regulations on investments made by Members of Congress, their spouses, and dependent children to prevent insider trading. Here’s a summary of its key components:

Definitions

The bill defines several important terms:

Covered individual: This refers to Members of Congress and their spouses or dependent children.
Covered investment: This mainly includes securities issued by publicly traded companies but does not cover certain exceptions like investment funds, interests in small businesses, or investments held in trusts with specific conditions.
Publicly traded company: A company that has a class of securities registered under the Securities Exchange Act of 1934.

Restrictions on Transactions

The bill sets forth the following restrictions:

No covered individual is allowed to purchase a covered investment while serving in federal office.
If a covered individual wants to sell a covered investment, they must publicly disclose their intent at least 7 days and no more than 14 days before the sale. This disclosure must include details such as the date of sale and the number of shares involved.

Exceptions

There are exceptions to the restrictions:

Spouses or dependent children of Members of Congress are exempt from these rules if they make transactions on behalf of others or in relation to their employment.
Covered individuals can reinvest dividends from covered investments without restrictions.

Enforcement and Penalties

The bill outlines enforcement mechanisms and penalties for violations:

If a covered individual violates the investment restrictions, they may incur a fee based on the nature of the violation, which can be either a flat fee or a percentage of the investment's value.
Violators may also be required to sell any covered investments bought illegally.
Fees collected for violations will go into the general fund of the Treasury.