[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 310 Introduced in House (IH)]
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118th CONGRESS
1st Session
H. R. 310
To amend title 5, United States Code, to prohibit transactions
involving certain financial instruments by senior Federal employees,
their spouses, or dependent children, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
January 12, 2023
Mr. Cloud (for himself and Mr. Golden of Maine) introduced the
following bill; which was referred to the Committee on Oversight and
Accountability, and in addition to the Committee on Ways and Means, for
a period to be subsequently determined by the Speaker, in each case for
consideration of such provisions as fall within the jurisdiction of the
committee concerned
_______________________________________________________________________
A BILL
To amend title 5, United States Code, to prohibit transactions
involving certain financial instruments by senior Federal employees,
their spouses, or dependent children, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Dismantling Investments in Violation
of Ethical Standards through Trusts Act''.
SEC. 2. PROHIBITING TRANSACTIONS AND OWNERSHIP OF CERTAIN FINANCIAL
INSTRUMENTS BY SENIOR FEDERAL EMPLOYEES, THEIR SPOUSES,
OR DEPENDENT CHILDREN.
(a) In General.--Chapter 13 of title 5, United States Code, is
amended by adding after subchapter III the following:
``SUBCHAPTER IV--RESTRICTIONS REGARDING FINANCIAL INSTRUMENTS
``Sec. 13151. Definitions
``In this subchapter:
``(1) Covered financial instrument.--
``(A) In general.--The term `covered financial
instrument' means--
``(i) any investment in--
``(I) a security (as defined in
section 3(a) of Securities Exchange Act
of 1934 (15 U.S.C. 78c(a)));
``(II) a security future (as
defined in that section); or
``(III) a commodity (as defined in
section 1a of the Commodity Exchange
Act (7 U.S.C. 1a)); and
``(ii) any economic interest comparable to
an interest described in clause (i) that is
acquired through synthetic means, such as the
use of a derivative, including an option,
warrant, or other similar means.
``(B) Exclusions.--The term `covered financial
instrument' does not include--
``(i) a diversified mutual fund;
``(ii) a diversified exchange-traded fund;
``(iii) a United States Treasury bill,
note, or bond; or
``(iv) compensation from the primary
occupation of a spouse or dependent child of a
senior Federal employee.
``(2) Qualified blind trust.--The term `qualified blind
trust' has the meaning given the term in section 13104.
``(3) Senior federal employee.--The term `senior Federal
employee' means any individual occupying a Senior Executive
Service position (as that term is defined in section 3132).
``(4) Supervising ethics office.--The term `supervising
ethics office' has the meaning given the term in section 13101.
``Sec. 13152. Prohibition on certain transactions and holdings
involving covered financial instruments
``(a) Prohibition.--Except as provided in subsection (b), a senior
Federal employee, their spouse, or their dependent children may not,
during the term of service of the employee, hold, purchase, or sell any
covered financial instrument.
``(b) Exceptions.--The prohibition under subsection (a) does not
apply to--
``(1) a sale by a senior Federal employee, their spouse, or
their dependent child that is completed by the date that is--
``(A) for an employee serving on the date of
enactment of this title, 180 days after that date of
enactment; and
``(B) for any employee who commences service as an
employee after the date of enactment of this title, 180
days after the first date of the initial term of
service;
``(2) a covered financial instrument held in a qualified
blind trust operated on behalf of, or for the benefit of, a
senior Federal employee, their spouse, or their dependent
child; or
``(3) a covered financial instrument exempted from coverage
under section 208 of title 18 pursuant to section 2640.202 of
title 5, Code of Federal Regulations (or any successor
regulation).
``(c) Application of Certificate of Divestiture Program.--For
purposes of section 1043 of the Internal Revenue Code of 1986--
``(1) this section shall be treated as a Federal conflict
of interest statute; and
``(2) any person required to dispose of any property by
reason of this section shall be treated as an eligible person.
``(d) Penalties.--
``(1) Disgorgement.--A senior Federal employee, their
spouse, or their dependent child shall disgorge to the general
fund of the Treasury any profit from a transaction or holding
involving a covered financial instrument that is conducted in
violation of this section.
``(2) Income tax.--A loss from a transaction or holding
involving a covered financial instrument that is conducted in
violation of this section may not be deducted from the amount
of income tax owed by the applicable senior Federal employee,
their spouse, or their dependent child.
``(3) Fines.--A senior Federal employee who holds or
conducts a transaction involving a covered financial instrument
in violation of this section may be subject to a civil fine
assessed by the supervising ethics office under section 13153.
``Sec. 13153. Certification of compliance
``(a) In General.--Not less frequently than annually, each senior
Federal employee shall submit to the supervising ethics office a
written certification that the employee, their spouse, or their
dependent child has achieved compliance with the requirements of this
title.
``(b) Publication.--The supervising ethics office shall publish
each certification submitted under subsection (a) on a publicly
available website.
``Sec. 13154. Authority of supervising ethics office
``(a) In General.--The supervising ethics office may implement and
enforce the requirements of this subchapter, including by--
``(1) issuing--
``(A) for applicable senior Federal employees--
``(i) rules governing that implementation;
and
``(ii) 1 or more reasonable extensions to
achieve compliance with this subchapter, if the
supervising ethics office determines that an
employee is making a good faith effort to
divest any covered financial instruments; and
``(B) guidance relating to covered financial
instruments;
``(2) publishing on the internet certifications submitted
by senior Federal employees under section 13153(a); and
``(3) assessing civil fines against any senior Federal
employee who is in violation of this subchapter, subject to
subsection (b).
``(b) Requirements for Civil Fines.--
``(1) Amount.--A fine imposed under this section against a
senior Federal employee shall be equal to the greater of--
``(A) $1,000, or
``(B) an amount equal to 10 percent of the greatest
dollar value of the applicable covered financial
instrument during any period that such instrument was
held by the applicable senior Federal employee or their
spouse or dependent child (as the case may be).
``(2) In general.--Before imposing a fine pursuant to this
section, the supervising ethics office shall provide to the
applicable senior Federal employee--
``(A) a written notice describing each covered
financial instrument transaction for which a fine will
be assessed; and
``(B) an opportunity, with respect to each such
covered financial instrument transaction--
``(i) for a hearing; and
``(ii) to achieve compliance with the
requirements of this subchapter.
``(3) Publication.--The supervising ethics office shall
publish on a publicly available website a description of--
``(A) each fine assessed pursuant to this section;
``(B) the reasons why each such fine was assessed;
and
``(C) the result of each assessment, including any
hearing under paragraph (2)(B)(i) relating to the
assessment.
``(4) Appeal.--A senior Federal employee may appeal to the
supervising ethics office a fine assessed under this section
during the 30-day period beginning on the date the fine is so
assessed.
``Sec. 13155. Audit by Government Accountability Office
``Not later than 2 years after the date of enactment of this
subchapter, the Comptroller General of the United States shall--
``(1) conduct an audit of the compliance by senior Federal
employees with the requirements of this subchapter; and
``(2) submit to each supervising ethics office a report
describing the results of the audit conducted under paragraph
(1).''.
(b) Application.--The amendments made by subsection (a) shall apply
to individuals described in section 13152(a) of title 5, United States
Code, (as added by subsection (a)) beginning on the date that is 12
months following the date of enactment of this Act.
(c) Additional Employees.--Section 13121(c)(1) of title 5, United
States Code, is amended by inserting ``up to 100'' after ``appoint''.
(d) Funding.--The Director of the Office of Management and Budget
may transfer such funds as the Director considers appropriate, to be
derived from unobligated amounts available for executive branch
programs identified by the Director to be duplicative, to the Office of
Government Ethics for the purpose of carrying out this Act, to remain
available until the date that is 5 years following the date of the
enactment of this Act.
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