Dismantling Investments in Violation of Ethical Standards through Trusts Act
This bill, titled the Dismantling Investments in Violation of Ethical Standards through Trusts Act, would create a new set of ethics rules in Title 5 for senior federal employees and their immediate family. It defines a category of “covered financial instruments” (including certain securities, futures, commodities, and synthetic positions via derivatives) and generally bars holding, purchasing, or selling these instruments during federal service. There are narrow exceptions (e.g., pre-enacted divestiture timelines, holdings in a qualified blind trust, or instruments exempted by specific regulations). The bill establishes penalties such as disgorgement of profits, non-deductibility of losses for tax purposes, and civil fines; it requires annual compliance certifications, and it assigns enforcement and reporting powers to the supervising ethics office, with public disclosure of certifications and penalties. It also mandates a Government Accountability Office audit within two years and provides funding mechanisms to support enforcement. In short, the bill aims to tightly restrict and publicly monitor high-conflict financial activity by senior federal employees and their families, with formal divestiture timelines, penalties, and ongoing transparency.
Key Points
- 1Definitions and scope: Creates a new Subchapter IV (Restrictions Regarding Financial Instruments) in Chapter 13 of Title 5, defining “covered financial instrument” to include certain investments in securities, futures, commodities, and synthetic positions via derivatives; excludes diversified mutual funds, diversified ETFs, U.S. Treasuries, and compensation earned from a spouse’s or dependent child’s primary occupation.
- 2Prohibition and exceptions: Prohibits senior federal employees, their spouses, and dependent children from holding, purchasing, or selling covered financial instruments during the employee’s service, with limited exceptions (e.g., a sale completed within 180 days after enactment or after beginning service, holdings in a qualified blind trust, and certain exemptions under 5 C.F.R. rules).
- 3Compliance and enforcement: Requires annual written certification of compliance to the supervising ethics office, with publication of certifications on a public website. The supervising ethics office may issue rules, grant extensions for good-faith divestiture, publish guidance, and assess civil fines for violations.
- 4Penalties: Disgorgement of profits from violations, non-deductibility of losses for tax purposes, and civil fines (at the discretion of the supervising ethics office). Fines are structured as the greater of $1,000 or 10% of the greatest dollar value of the instrument held during the relevant period; notice and hearing rights are provided before fines are imposed.
- 5Transparency and oversight: Certifications and related enforcement actions are publicly disclosed; the Government Accountability Office must conduct a compliance audit within two years of enactment and report results to supervising ethics offices.
- 6Administrative and funding provisions: Applies to affected individuals 12 months after enactment; allows the Director of the OMB to transfer funds to the Office of Government Ethics to implement the act for up to five years; expands staffing authority to appoint additional federal employees (up to 100).