S. 1498: Preventing Elected Leaders from Owning Securities and Investments (PELOSI) Act

The Preventing Elected Leaders from Owning Securities and Investments (PELOSI) Act is a proposed legislation designed to regulate the financial transactions of Members of Congress. The main goal of this bill is to prevent potential conflicts of interest that could arise from members profiting from financial instruments while serving in their official capacities. Below is a summary of the key provisions of this bill:

Prohibition on Financial Transactions

Under the bill, Members of Congress, along with their spouses, are prohibited from:

• Holding any covered financial instruments during their term of service.
• Purchasing or selling covered financial instruments during their term.

Definition of Covered Financial Instruments

Covered financial instruments include:

• Securities, as defined in the Securities Exchange Act of 1934.
• Securities futures and commodities.
• Any economic interests similar to the above that are acquired through synthetic means, including derivatives like options or warrants.

However, the following are excluded from this definition:

• Investment in diversified mutual funds.
• Investment in diversified exchange-traded funds.
• Investment in U.S. Treasury securities.
• Compensation from primary occupations of spouses or dependent children.

Compliance and Reporting

Members of Congress are required to certify compliance with these provisions at least annually to the relevant ethics committee. These certifications will be published on a publicly accessible website.

Penalties for Non-Compliance

Should a Member of Congress or their spouse violate these prohibitions, the following penalties may be applied:

• They would be required to disgorge any profits from improper transactions to the U.S. Treasury.
• Civil fines could be assessed for violations, enforced by the supervising ethics committee, with the potential for repeat occurrences leading to increased penalties.

Authority of Ethics Committees

Supervising ethics committees will have the authority to implement and enforce the rules established by this bill. They may issue regulations, provide guidance, and publish compliance certifications online.

Audit and Oversight

Additionally, the bill mandates an audit by the Government Accountability Office within two years of its passage to assess Member compliance with the regulations set forth.

Transition Period for Existing Members

Members of Congress that are in office when the bill is enacted will have a grace period of 180 days to divest any covered financial instruments appropriately.

Relevant Companies

None found.