[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 389 Introduced in House (IH)]
<DOC>
118th CONGRESS
1st Session
H. R. 389
To amend the Ethics in Government Act of 1978 to restrict trading and
ownership of covered investments by each Federal employee, and for
other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
January 17, 2023
Mr. Schweikert introduced the following bill; which was referred to the
Committee on Oversight and Accountability, and in addition to the
Committees on the Judiciary, House Administration, and 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 the Ethics in Government Act of 1978 to restrict trading and
ownership of covered investments by each Federal employee, 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 ``Preventing Opportunistic Returns on
Trades and Futures by Officials, Leadership, and Individuals in Office
Act'' or the ``PORTFOLIO Act''.
SEC. 2. RESTRICTING TRADING AND OWNERSHIP OF COVERED INVESTMENTS BY
FEDERAL PERSONNEL.
(a) Qualified Blind Trust Amendments.--Section 102(f)(3) of the
Ethics in Government Act of 1978 (5 U.S.C. App 102(f)(3)) is amended--
(1) in subparagraph (C)(iii), by striking ``promptly
notify'' and inserting ``promptly provide a written notice
to''; and
(2) by adding after subparagraph (F) the following new
subparagraph:
``(G) Any asset described as a covered investment under
title II that is placed in a trust after the date of enactment
of the PORTFOLIO Act shall be divested not later than 18 months
after such asset was so placed.
``(H) Notwithstanding subparagraphs (A) through (G), a form
of a trust approved by the Office of Government Ethics,
Judicial Conference, House of Representatives, or Senate
through rulemaking or by majority vote for its respective
jurisdiction.''.
(b) Trade and Ownership Restrictions.--The Ethics in Government Act
of 1978 (5 U.S.C. App.) is amended by inserting after title I the
following:
``TITLE II--RESTRICTIONS ON TRADE AND OWNERSHIP OF COVERED INVESTMENTS
BY FEDERAL PERSONNEL
``SEC. 201. DEFINITIONS.
``In this title:
``(1) Commodity.--The term `commodity' has the meaning
given the term in section 1a of the Commodity Exchange Act (7
U.S.C. 1a).
``(2) Covered investment.--The term `covered investment'--
``(A) means an investment in a security, a
commodity, a future, cryptocurrency or other digital
asset, or any comparable economic interest acquired
through synthetic means, such as the use of a
derivative, including an option, warrant, or other
similar means; and
``(B) does not include--
``(i) a widely held investment fund
described in section 102(f)(8) that is
diversified and publicly traded on a national
or regional stock exchange;
``(ii) an asset held in a qualified blind
trust;
``(iii) an asset held in a qualified
diversified trust;
``(iv) a diversified mutual fund (including
any holdings of such a fund);
``(v) a diversified exchange-traded fund
(including any holdings of such a fund);
``(vi) a United States Treasury bill, note,
or bond;
``(vii) a State or municipal government
bill, note, or bond;
``(viii) the Thrift Savings Plan (including
any holdings in such plan);
``(ix) any compensation received by the
spouse or dependent child of a covered official
from their primary employer;
``(x) any investment fund held in a
Federal, State, or local government employee
retirement plan; or
``(xi) an interest in a small business
concern or family-owned business that does not
present a conflict of interest.
``(3) Covered person.--The term `covered person' means--
``(A) any employee (as that term is defined in
section 2105 of title 5, United States Code),
including--
``(i) an officer or employee of the United
States Postal Service and the Postal Regulatory
Commission;
``(ii) notwithstanding section 7425(b) of
title 38, United States Code, employees
appointed under chapter 73 or 74 of such title
38; and
``(iii) any other individual occupying a
position in the civil service (as that term is
defined in section 2101 of such title 5);
``(B) a Member of Congress as defined in section
109(12);
``(C) the President; and
``(D) the Vice President.
``(4) Cryptocurrency or other digital asset.--The term
`cryptocurrency or other digital asset' means an asset that is
issued or transferred using distributed ledger or blockchain
technology, including: virtual currencies, coins and tokens, or
any other digital asset specified by regulations of a filer's
supervising ethics office.
``(5) Dependent child.--The term `dependent child' means an
individual described in section 109(2).
``(6) Interested party.--The term `interested party' has
the meaning given the term in section 102(f)(3)(E).
``(7) Future.--The term `future' means a financial contract
obligating the buyer to purchase an asset or the seller to sell
an asset, such as a physical commodity or a financial
investment, at a predetermined future date and price.
``(8) Qualified blind trust.--The term `qualified blind
trust' has the meaning given the term in section 102(f)(3).
``(9) Qualified diversified trust.--The term `qualified
diversified trust' means a trust described in section
102(f)(4)(B).
``(10) Security.--The term `security' has the meaning given
the term in section 3(a) of the Securities Exchange Act of 1934
(15 U.S.C. 78c(a)).
``(11) Small business concern.--The term `small business
concern' has the meaning given that term under section 3 of the
Small Business Act (15 U.S.C. 632).
``(12) Supervising ethics office.--The term `supervising
ethics office' has the meaning given the term in section
109(18).
``SEC. 202. OWNERSHIP OF COVERED INVESTMENTS.
``(a) Conduct During Federal Service.--Except as described in
paragraph (2) of subsection (b) or subsections (c) through (h), no
covered person may own or trade any covered investment.
``(b) Compliance.--To comply with the requirements under paragraph
(1)--
``(1) a covered person shall not purchase any covered
investment beginning 60 days after the date of enactment of the
PORTFOLIO Act or the date on which an individual becomes a
covered person, whichever is later; and
``(2) a covered person shall divest of any covered
investment within 180 days of the effective date established in
subsection (k)(2) or the date on which an individual becomes a
covered person, whichever is later--
``(A) through gift or charitable donation of a
covered investment;
``(B) by converting a covered investment to cash;
or
``(C) by placing a covered investment in a
qualified blind trust in accordance with subsection
(c).
``(c) Qualified Blind Trust.--
``(1) Covered persons as of date of enactment.--An
individual who is a covered person as of the date of enactment
of the PORTFOLIO Act may comply with subsection (b) by placing
any covered investment owned by such person into a qualified
blind trust not later than 180 days after the effective date
established in subsection (k)(2).
``(2) Covered persons after date of enactment.--An
individual who becomes a covered person after the date of
enactment of the PORTFOLIO Act may comply with subsection (b)
by placing any covered investment owned by such person into a
qualified blind trust not later than 180 days after the
effective date established in subsection (k)(2) or the date on
which the individual becomes a covered person, whichever is
later.
``(3) Mingling of assets.--A spouse or dependent child of a
covered person may place a covered investment in a qualified
blind trust established by a covered person.
``(d) Public Notification.--Not later than 30 days after receiving
any written notice under section 102(f)(3)(C)(iii), the supervising
ethics office shall make such notices publicly available in the manner
provided under section 105(a).
``(e) Exception.--Subsection (a) shall not apply to an individual
who ceases to be a covered person within 180 days of the date of the
enactment of the PORTFOLIO Act.
``(f) Complex Financial Arrangements.--
``(1) Temporary exemptions.--A supervising ethics office
may grant a temporary exemption to a covered person regarding
their compliance with the requirements of subsection (a) for
investments held in trusts or other complex financial
arrangements in which--
``(A) the covered person entered into, or was made
a beneficiary of or to, a complex financial arrangement
before the enactment of the PORTFOLIO Act; and
``(B) the covered person is contractually
prohibited from--
``(i) having knowledge or control of the
covered person's investments; or
``(ii) withdrawing the investment in
certain circumstances.
``(2) Publication.--A supervising ethics office shall make
publicly available in the manner provided under section
105(a)--
``(A) any requests from a covered person for a
temporary exemption within 30 days of receipt; and
``(B) any decision by the supervising ethics office
on the temporary exemption request of a covered person
within 30 days of issuing it.
``(g) Assets Acquired in Special Circumstances.--
``(1) Divestment.--Except as described in paragraph (2), in
the event that a covered person acquires a covered investment
after the date of enactment of the PORTFOLIO Act other than by
purchase (such as by marriage, inheritance, divorce settlement,
or other circumstance), the covered person shall have 180 days
of the effective date established in subsection (k)(2) to
divest of such investment through any means provided under
subsection (b)(2).
``(2) Extension.--A supervising ethics office may grant a
covered person an extension of time to comply with the deadline
specified in paragraph (1) in accordance with subsection (h).
``(h) Extensions.--With respect to subsections (a) and (g), in
response to a written request for an extension, a supervising ethics
office may grant a covered person one or more extensions to comply with
such subsections in the following manner:
``(1) An extension of up to 30 days may be granted but the
total of all extensions for each covered person in a calendar
year may not exceed 90 days.
``(2) A copy of each extension granted by the supervising
ethics office shall be made publicly available in the manner
provided under section 105(a).
``(i) Rules Providing Nonrecognition of Gain on Sales To Comply
With Conflict-of-Interest Requirements Not Applicable.--For purposes of
section 1043 of the Internal Revenue Code of 1986, this title (and any
regulation or rule issued pursuant to this title) shall not be treated
as a statute, regulation, or rule described in subsection (b)(2)(A) of
such section.
``(j) Assets Upon Separation.--An individual who is a covered
person under this section may not dissolve any qualified blind trust in
which a covered investment has been placed pursuant to subsection (c),
or otherwise control such an investment, until the date that is 180
days after the date such individual ceases to be a covered person.
``(k) Administration and Enforcement.--
``(1) In general.--The provisions of this section shall be
administered by the supervising ethics office for each branch.
``(2) Regulations.--Within 180 days of enactment of the
PORTFOLIO Act, the supervising ethics office for each branch
shall issue regulations implementing the provisions of this
section and specifying an effective date for the provisions of
this section.
``(3) Guidance.--The supervising ethics office for each
branch is authorized to issue guidance on any matter contained
in this section for its respective jurisdiction.
``SEC. 203. PENALTIES FOR VIOLATIONS OF RESTRICTIONS ON TRADING AND
OWNERSHIP OF COVERED INVESTMENTS.
``(a) Penalties.--
``(1) In general.--Any covered person who violates the
restrictions on trading or ownership of covered investments in
section 202 shall, at the direction of the supervising ethics
office, pay a fee of $1,000 after being notified by the
supervising ethics office of such violation.
``(2) Assessment of additional penalties.--If the violation
that is the subject of a notice under paragraph (1) continues
for more than 30 days after the date of the notice (including a
violation resulting from a covered person who continues to own
a covered investment in violation of section 202) for each
subsequent 30-day period after the date of the notice during
which the violation is ongoing, such person shall be assessed
an additional fee equal to--
``(A) the amount in paragraph (1); plus
``(B) an amount equal to 10 percent of the value of
the covered investment that is the subject of the
violation at the beginning of the additional 30-day
period of a continuing violation.
``(3) Annual indexing of penalty for inflation.--By January
31 of the calendar year following the enactment of the
PORTFOLIO Act and in each year thereafter, the supervising
ethics office shall adjust the amount of the penalty in
paragraph (1) in the same manner that civil monetary penalties
are annually adjusted for inflation pursuant to section 4 of
the Federal Civil Penalties Inflation Adjustment Act of 1990
(28 U.S.C. 2461 note).
``(4) Treatment of fees.--
``(A) Deposit.--All such fees collected under this
section shall be deposited in the miscellaneous
receipts of the Treasury.
``(B) Delegation of authority.--The authority under
this section to direct the payment of a fee may be
delegated by the supervising ethics office in the
executive branch to other agencies in the executive
branch.
``(b) Waiver or Reduction.--
``(1) In general.--The supervising ethics office may waive
or reduce the amount of a fee under subsection (a) in
extraordinary circumstances in response to a written request
signed by the covered person to whom the fee would otherwise
apply.
``(2) Publication.--In the event the supervising ethics
office grants a request for a fee waiver or reduction, the
response of the supervising office shall be made public in the
same manner as under section 105(a).
``(c) Civil Penalties.--The Attorney General may bring a civil
action in any appropriate United States district court in the same
manner as authorized by section 104(a)(1) against any individual who--
``(1) knowingly and willfully makes a transaction in a
manner that is prohibited by section 202; or
``(2) knowingly and willfully holds a covered investment in
a manner that is prohibited by section 202.
``SEC. 204. ACCOUNTABILITY AND PUBLIC DISCLOSURE OF ENFORCEMENT
MEASURES.
``(a) Referral to Attorney General.--The head of each agency, each
Secretary concerned, the Director of the Office of Government Ethics,
each congressional ethics committee, or the Judicial Conference, shall
refer to the Attorney General the name of any individual whom such
official or committee has reasonable cause to believe has willfully
violated the requirements under section 202.
``(b) Judicial Officers.--Whenever the Judicial Conference refers a
name to the Attorney General under this section, the Judicial
Conference also shall notify the judicial council of the circuit in
which the named individual serves of the referral.
``(c) Report to Congress.--
``(1) In general.--The Attorney General shall annually
submit to Congress a report on the criminal and civil actions
brought against any individual under titles I or II.
``(2) Timing.--Such report shall be filed by January 31 of
each year covering the prior calendar year.
``(d) Reports by Supervising Ethics Office.--
``(1) In general.--Each supervising ethics office shall
annually make a public report about compliance by individuals
within its jurisdiction with the requirements of titles I or
II.
``(2) Contents.--Such public report shall include the
following information:
``(A) The overall compliance by such individuals.
``(B) The measures taken by the supervising ethics
office to ensure compliance.
``(C) The efforts taken to enforce such
requirements, including through the issuance of fees or
other sanctions.
``(D) The rate of compliance with the enforcement
measures described under subparagraph (C).
``(E) The issuance of waivers, reductions,
temporary exemptions, and extensions for statutory
requirements, rules, or enforcement measures described
under subparagraph (C).
``(3) Timing.--Such public report shall be filed by January
31 of each year covering the prior calendar year.''.
SEC. 3. REFORMS TO FINANCIAL DISCLOSURE REQUIREMENTS.
(a) Updated Income Reporting Requirements.--Section 102(a)(1)(B) of
the Ethics in Government Act of 1978 (5 U.S.C. App. 102(a)(1)(B)) is
amended--
(1) in clause (vii), by adding at the end ``or'';
(2) in clause (viii), by striking ``greater than
$1,000,000'' through ``not more than $5,000,000, or'' and
inserting ``greater than $1,000,000, in which case the filer
shall provide an indication of the value of such income rounded
to the nearest one hundred thousand dollars.''; and
(3) by striking clause (ix).
(b) Increased Transparency for Interests in Property, Liabilities,
Transactions, and Qualified Blind Trusts.--Section 102(d)(1) of the
Ethics in Government Act of 1978 (5 U.S.C. App. 102(d)(1)) is amended--
(1) in subparagraph (G), by adding at the end ``and'';
(2) by striking subparagraphs (H), (I), and (J); and
(3) by inserting after subparagraph (G) the following
subparagraph:
``(H) greater than $5,000,000, in which case the filer
shall provide an indication of the value rounded to the nearest
million dollars.''.
(c) Ending Disclosure Loophole.--Section 102(e)(1) of the Ethics in
Government Act of 1978 (5 U.S.C. App. 102(e)(1)) is amended--
(1) in the matter preceding subparagraph (A), by striking
``Except as provided in the last sentence of this paragraph,
each'' and insert ``Each''; and
(2) by striking subparagraph (F).
(d) Swifter Disclosure of Certain Transactions.--Section 103 of the
Ethics in Government Act of 1978 (5 U.S.C. App. 103) is amended--
(1) in subsection (l), by striking ``Not later than'' and
inserting ``Except as provided in subsection (m), not later
than''; and
(2) by adding at the end the following subsection:
``(m) Not later than 14 days after receiving notification of any
transaction required to be reported under section 102(a)(5)(B), where
the value of the transaction is $15,000 or greater, but in no case
later than 21 days after such transaction, the persons listed in
subsection (l), if required to file a report under any subsection of
section 101, subject to any waivers and exclusions, shall file a report
of the transaction. In such case, the filer does not need to file an
additional report of that transaction pursuant to subsection (l).''.
(e) Disclosure of Cryptocurrency or Other Digital Assets.--Section
102(a) of the Ethics in Government Act of 1978 (5 U.S.C. App. 102(a))
is amended--
(1) in paragraph (3), by inserting ``For purposes of this
paragraph, `property' includes cryptocurrency or other digital
assets that are issued or transferred using distributed ledger
or blockchain technology including: virtual currencies, coins
and tokens or any other digital asset specified by regulations
of a filer's supervising ethics office.'' after ``similar
financial institution.''; and
(2) in paragraph (5)(B), by striking ``other forms of
securities.'' and inserting ``other forms of securities and in
cryptocurrency or other digital assets that are issued or
transferred using distributed ledger or blockchain technology
including: virtual currencies, coins and tokens or any other
digital asset specified by regulations of a filer's supervising
ethics office.''.
(f) Mandatory Electronic Filing.--Section 103(a) of the Ethics in
Government Act of 1978 (5 U.S.C. App. 103(a)) is amended by striking
``or in which he will serve.'' and inserting ``or in which the
individual will serve using the system for electronically filing
reports implemented by that agency's supervising ethics office.''.
(g) Supervising Ethics Office.--
(1) Added authorities.--Section 111 of the Ethics in
Government Act of 1978 (5 U.S.C. App. 111) is amended--
(A) by striking ``The provisions of this title''
and inserting ``(a) The provisions of this title'';
(B) by striking ``The Judicial Conference may
delegate any authority it has under this title to an
ethics committee established by the Judicial
Conference.'';
(C) in paragraph (3) by striking ``101(f).'' and
inserting ``101(f). The Judicial Conference may
delegate any authority it has under this title to an
ethics committee established by the Judicial
Conference.''; and
(D) by adding after subsection (a), as redesignated
by this subsection, the following subsection:
``(b) Each supervising ethics office--
``(1) shall develop and make available forms for the
reporting of information required by titles I or II, including
modifications to the system for electronically filing reports
implemented by that agency's supervising ethics office, as
necessary;
``(2) may issue rules or regulations implementing titles I
or II;
``(3) may establish procedures and promulgate forms;
``(4) may render advisory opinions interpreting titles I or
II in the same manner as authorized by section 106(b)(7);
``(5) may impose and collect fees as provided in sections
104 and 203;
``(6) shall notify any individual within its jurisdiction
of the changes to disclosure requirements, including revisions
to the forms and electronic filing system and any regulations
issued by the supervising ethics office; and
``(7) shall provide a written notice about the changes to
titles I and II to any individual within its jurisdiction
within 15 days of any such change.''.
(2) Timing.--For purposes of section 111(b)(1) of the
Ethics in Government Act of 1978, as added by paragraph (1),
the supervising ethics office shall develop the first iteration
of the form required under such section within 90 days of the
date of enactment of the PORTFOLIO Act.
(h) Effective Date.--The amendments made by this section shall
apply to any report due beginning 120 days after the date of the
enactment of this Act, except that the amendments made by subsection
(f) shall apply to any report due beginning 60 days after the date of
the enactment of this Act.
SEC. 4. NEW AND STRENGTHENED PENALTIES FOR NONCOMPLIANCE.
(a) Penalties for Failure To Timely File Reports; Publication of
Fees Assessed.--Section 104(d) of the Ethics in Government Act of 1978
(5 U.S.C. App. 104(d)) is amended--
(1) in the matter following paragraph (1)(B), by striking
``$200'' and inserting ``$500'';
(2) by redesignating paragraph (2) as paragraph (5);
(3) by inserting after paragraph (1) the following:
``(2) For each subsequent 30-day period during which the individual
has not filed a report required to be filed under this title, the
individual shall be assessed an additional filing fee equal to--
``(A) $500; plus
``(B) if the report is required under section 103(l), an
amount equal to 10 percent of the actual value of the
transactions that should have been disclosed on the report.
``(3) By January 31 of the calendar year following the enactment of
the PORTFOLIO Act and in each year thereafter, the supervising ethics
office shall adjust the $500 figure in paragraphs (1) and (2) in the
same manner that civil monetary penalties are annually adjusted for
inflation pursuant to section 4 of the Federal Civil Penalties
Inflation Adjustment Act of 1990 (28 U.S.C. 2461 note).
``(4) With respect to a filing fee required to be paid under this
subsection, the supervising ethics office shall make available, on a
publicly accessible website, the following information:
``(A) The name and occupation of the individual required to
pay such fee.
``(B) The amount of each such fee that such individual is
required to pay.
``(C) The date on which the supervising ethics office
assessed each such fee described in subparagraph (B).
``(D) An indication as to whether such individual has paid
each amount described in subparagraph (B).''; and
(4) by adding after paragraph (5), as redesignated by this
subsection, the following paragraph:
``(6) With respect to a waiver granted under paragraph (5), the
supervising ethics office shall make available the name and occupation
of each recipient of such waiver on a publicly accessible website.''.
(b) Effective Date.--The amendments made by this section shall
apply for any report due beginning 30 days after the date of enactment
of this Act.
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