Preventing Elected Leaders from Owning Securities and Investments (PELOSI) Act
The PELOSI Act would prohibit Members of Congress and their spouses from holding, purchasing, or selling certain kinds of financial instruments during a Member’s term in office. Specifically, it bans “covered financial instruments,” defined to include stocks, stock futures, commodities, and derivatives (and equivalents acquired through synthetic means), with narrow exceptions. The bill creates enforcement, reporting, and oversight mechanisms: annual compliance certifications, public disclosure of certifications and any fines, and the authority of supervising ethics committees (House and Senate) to enforce the rules, issue guidance, and levy civil penalties. It also requires an audit by the Government Accountability Office (GAO) within two years of enactment to assess compliance. Some sales are allowed for pre-enactment divestment windows, and new Members have a 180-day transition period. Public integrity and ethics considerations are central, aiming to curb potential conflicts of interest and insider trading concerns among lawmakers and their immediate families.
Key Points
- 1Covered financial instruments: Includes securities, security futures, commodities, and instruments obtained through derivatives or synthetic means (e.g., options, warrants). Excludes diversified mutual funds, diversified ETFs, U.S. Treasury securities, and compensation to a Member’s spouse or dependent child.
- 2Prohibition and scope: Members of Congress and their spouses may not hold, purchase, or sell covered financial instruments during the Member’s term, with limited exceptions for pre-enactment sales completed within 180 days after enactment, and for new Members within 180 days after their initial term starts.
- 3Enforcement and penalties: Violations can lead to disgorgement of profits to the U.S. Treasury and civil fines set by supervising ethics committees (10% of the value of un-divested covered instruments per applicable penalty period). Violations trigger notices, potential hearings, and ongoing penalties if noncompliance continues; fines are publicly disclosed.
- 4Certification and transparency: Members must annually certify compliance, and these certifications must be published on a public website.
- 5Oversight and auditing: Supervising ethics committees can issue rules, provide guidance, extend divestment periods if a Member is making a good-faith effort, and publish information about fines and enforcement. The GAO must conduct an audit within two years of enactment and report results to the ethics committees.