H.R. 9429: The Public Service Accountability Act

This bill would prohibit certain federal officials from owning or trading most stocks and other covered investments while they are in office. In plain terms, it is designed to prevent Members of Congress, their spouses, and their dependent children from holding or trading securities, commodities, futures, and similar financial interests, with some exceptions.

Who would be covered

The restrictions would apply not only to Members of Congress, but also to several other categories of federal officials, including:

• Congressional officers and employees;
• Judicial officers and judicial employees;
• Certain executive branch officials, including senior executives and Schedule C policy or confidential employees;
• The President and Vice President; and
• The spouses and dependent children of the President, Vice President, and Members of Congress.

What investments would be restricted

The bill would bar covered individuals from directly or indirectly owning or trading “covered investments,” which includes stocks, commodities, futures, and similar economic interests acquired through derivatives or other synthetic means.

It would still allow some investments and financial interests, including:

• Diversified, widely held mutual funds or similar publicly traded investment funds;
• U.S. Treasury bills, notes, and bonds;
• State and municipal bonds;
• Regular compensation earned by a spouse or dependent child from their employer;
• Interests in a small business;
• An LLC used only to hold a Member’s personal residence; and
• Certain Alaska Native Claims Settlement Act stock.

Other financial activity the bill would restrict

The bill would also prohibit covered individuals from entering into certain agreements or transactions tied to specific events or contingencies involving commodities, if those arrangements depend on whether something happens, does not happen, or happens to a certain extent.

How existing holdings would be handled

People already in covered positions when the bill becomes law would have 180 days to divest prohibited investments. People who later become covered would have 90 days from the date they take the covered position to divest.

If a covered investment is acquired without purchase, such as through marriage, inheritance, or divorce settlement, the person would have 90 days to sell it at fair market value.

The bill would also require qualified blind trusts to be divested under the same timeline.

Tax and ethics treatment

The bill would make these divestitures eligible for the federal “certificate of divestiture” tax relief process, which can help avoid immediate tax consequences when an official is required to sell assets because of ethics rules. It would require supervising ethics offices to issue certificates once compliance is shown.

Penalties

If someone violates the restrictions, the supervising ethics office could impose a penalty equal to 10% of the value of the covered investment and require the person to give up any profits from the violating transaction. The bill says those penalties could not be paid with certain congressional office funds or campaign-related donations. The ethics offices would also have to publish information about fines, why they were assessed, and the outcome.

Other notes

The bill says it should not be interpreted as applying to people in General Schedule positions. It also directs ethics offices to issue guidance on any terms that are not already defined.

Relevant Companies

None found