Preventing Elected Leaders from Owning Securities and Investments (PELOSI) Act

S.58 (118th Congress)

Retrieved on 2025-05-15

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S.439 (118th Congress) - Preventing Elected Leaders from Owning Securities and Investments (PELOSI) Act

Summary

The Preventing Elected Leaders from Owning Securities and Investments (PELOSI) Act, also known as bill S. 58, seeks to strengthen regulations within the Ethics in Government Act of 1978. Its primary provision prohibits Members of Congress and their spouses from buying, selling, or holding specific financial instruments, including securities, commodities, and synthetic investments, while in office. Notably, exceptions to these rules allow for investments in diverse mutual funds, exchange-traded funds, U.S. Treasury bonds, and compensation from a spouse's employment.

If enacted, current Members would need to comply within 180 days, whereas new Members would be subject to these restrictions from their onset in office. Violating these rules could result in penalties such as returning profits to the Treasury, restrictions on tax loss deductions, and civil fines assessed by ethics committees. Members must also certify their compliance annually, promoting transparency and accountability regarding their financial activities while in office.

To ensure oversight, supervising ethics committees will publish the financial certifications for public access and enforce compliance measures, including rulemaking, guidance provision, and civil fine issuance for violations. Before any fines are levied, the concerned Member must receive a written notification and have the opportunity for a hearing to contest the decision, with all outcomes made public.

Furthermore, the bill requires the Government Accountability Office to audit Members' compliance within two years of enactment and report the findings. The bill also introduces several amendments to the Ethics in Government Act, including modernizing terminology, updating references to broaden inclusivity in definitions related to ethics and lobbying, and ensuring clarity in the Securities Exchange Act of 1934.

Through these measures, the PELOSI Act signifies a commitment to enhancing ethical standards in Congress, fostering trust and integrity in public service, and modernizing the legislative framework governing ethics and lobbying.

Topics

civil rightsfinancejustice

Questions About This Bill

Can members of Congress still invest in mutual funds and U.S. Treasury bonds while in office?

Yes, members of Congress can still invest in mutual funds and U.S. Treasury bonds while they are in office. The bill states that these types of investments are not considered "covered financial instruments," which means they are allowed.

What are the penalties if a member of Congress breaks the rules of this bill?

If a member of Congress breaks the rules of this bill, there can be several penalties:

  1. Fines: They might have to pay a civil fine. This fine is decided by a special ethics committee.

  2. Loss of Tax Deductions: If they have a financial loss from a bad transaction that breaks the rules, they cannot use that loss to lower their taxes.

  3. Returning Profits: If they make money from a transaction that violates the rules, they must give that money back to the U.S. Treasury.

  4. Appeal: They have the right to appeal or challenge the fine in front of the Senate or House, which means they can ask their fellow members to vote on it.

  5. Audit: There will be checks to make sure they are following the rules, and reports will be published for the public to see.

In simple terms, if they break the rules, they might have to pay money, can’t use losses for taxes, must give back any profits they shouldn’t have made, and can ask others to help decide if the fine was fair.

How long do current members of Congress have to comply with the new rules?

Current members of Congress have 180 days after the bill becomes law to comply with the new rules about holding or trading certain financial investments. This means they need to follow the new rules within about six months of the bill being signed. If new members join Congress after the bill is passed, they also have 180 days to comply from when they start their term.

What kind of financial activities will members of Congress have to report every year?

Members of Congress will have to report their financial activities that involve "covered financial instruments." This includes things like stocks, bonds, and certain types of investments. However, there are some exceptions; for example, they don't have to report investments in big mutual funds or U.S. Treasury securities. Every year, Congress members must confirm that they are following these rules and report any investments they have in these areas. If they don’t follow the rules, they might have to pay fines or give up any profits they made from those investments.

Will the public be able to see the financial certifications of Congress members?

Yes, the public will be able to see the financial certifications of Congress members. According to the bill, the supervising ethics committees are required to publish each certification that members submit about their financial activities on a publicly available website. This means that anyone can look up this information to see if Congress members are following financial rules.

What happens if a member of Congress wants to contest a fine they received?

If a member of Congress gets a fine and thinks it is unfair, they can challenge it by asking for a vote in front of all the other members in either the Senate or the House of Representatives. This is called an appeal, and they can do it as a special kind of request that gets attention quickly.

How often will the Government Accountability Office check if Congress members are following the rules?

The Government Accountability Office (GAO) will check if Congress members are following the rules every two years. They will conduct an audit to see if the members are doing what they are supposed to do and will report their findings to the ethics committees.

What is meant by the term 'synthetic investments' in the bill?

The term "synthetic investments" in this bill refers to special types of financial investments that aren't regular stocks or bonds. Instead, these are created using something called "derivatives," which are financial tools like options or warrants. These tools allow people to gain from the changes in the price of other assets (like stocks) without actually owning them directly. So, synthetic investments are like shortcuts to get the benefits of owning something, but without having to buy it directly.