This bill, the Government Integrity in Financial Holdings and Transactions Act, would prevent members of Congress and other high-ranking government officials from buying, trading, or holding individual stocks while in office. It would require them to either sell off these stocks or place them in a blind trust managed by an independent trustee. Immediate family members would be similarly restricted to prevent conflicts of interest.
The bill also establishes an independent oversight office to monitor compliance, enforce penalties, and report violations to the public. Officials found violating the rules could face fines, criminal charges, and, in severe cases, expulsion or removal from office. By eliminating officials’ direct financial stakes in companies they regulate, this bill aims to prevent conflicts of interest, increase transparency, and enhance public trust in government.
Policy Title: Government Integrity in Financial Holdings and Transactions Act
Objective:
To prevent members of Congress and high-ranking government officials from engaging in financial activities that may conflict with their public duties. This policy restricts officials and their immediate family members from buying, trading, or owning individual stocks during their terms, thus fostering impartiality and trust.
1. Definitions and Scope
- Covered Officials:
This policy applies to:- All members of Congress (Senators and Representatives)
- Cabinet members, federal judges, heads of federal agencies, and other senior officials in the executive and judicial branches.
- Spouses, dependent children, and any immediate family member living in the same household.
- Prohibited Holdings:
Covered officials may not hold, buy, or trade:- Individual stocks in any publicly traded company.
- Financial interests (e.g., options, futures, cryptocurrency, or derivative instruments) in any individual company.
- Real estate investment trusts (REITs) or other investments that hold direct assets in regulated industries or sectors overseen by their office.
- Allowed Investments:
- Investments in broad-market index funds, mutual funds, exchange-traded funds (ETFs), and government bonds are permitted.
- Sector-specific funds are prohibited to avoid conflicts of interest with legislative or regulatory responsibilities.
2. Mandatory Divestment and Qualified Blind Trusts
- Divestment:
Covered officials must divest prohibited holdings within 60 days of assuming office. This divestment includes:- Sale of all individual stocks, REITs, or other restricted assets.
- Conversion of assets into approved vehicles (e.g., index funds or mutual funds).
- Qualified Blind Trust (QBT):
- If a covered official does not want to divest entirely, they may place assets in a QBT, administered by an independent, government-approved trustee.
- The trustee manages the assets without informing the official about specific holdings or trades, which prevents conflicts of interest.
- Once in a QBT, the official cannot alter the holdings or communicate about them with the trustee.
- Trustee and Trust Conditions:
- The trustee must be a certified financial fiduciary without personal or political ties to the official.
- Only widely diversified funds or approved securities may be added to the QBT during the official’s term.
3. Investment Restrictions on Immediate Family Members
- Spouse and Dependent Family Rules:
- Immediate family members are prohibited from buying or trading individual stocks or assets on behalf of, or in coordination with, the official. These restrictions extend to any trust, brokerage, or account controlled jointly or primarily by family members.
- Audit and Disclosure Requirements:
- Annual financial disclosures must include a sworn statement from the official confirming that neither they nor their immediate family hold or trade any prohibited assets.
4. Expanded Disclosure and Reporting Requirements
- Pre-Appointment Disclosure:
- Prior to taking office, the official must disclose all personal financial assets, including stocks, REITs, options, real estate, cryptocurrency, or business interests.
- Annual Public Reporting:
- Every year, covered officials must submit a comprehensive report detailing financial holdings, income from approved investments, and verification of QBT compliance.
- Verification of Compliance:
- An independent Office of Government Financial Integrity (OGFI) will be responsible for verifying compliance. The OGFI will conduct random audits of all covered officials and publicize their findings.
- Ban on Insider Information Use:
- Covered officials are prohibited from sharing or acting on non-public information for personal or family gain, with strict criminal penalties for any violations.
5. Enforcement Mechanisms and Penalties
- Civil and Criminal Penalties:
- Violations may lead to civil fines up to $500,000 per incident or twice the profit gained, whichever is greater.
- Criminal charges for willful violations may include imprisonment up to 5 years, in addition to fines.
- Expulsion and Removal:
- Repeated or egregious violations by members of Congress may result in expulsion, pending a two-thirds vote by the respective chamber.
- Executive and judicial officials may face removal proceedings if violations are confirmed.
- Public Notification of Violations:
- Any breach, once verified, will be publicly disclosed by the OGFI within 30 days, and the official’s profile will reflect non-compliance until resolved.
6. Restrictions on Lobbying and Consulting During and After Service
- Ban on Concurrent Business Roles:
- Covered officials may not serve as paid advisors, consultants, or board members for private companies or entities during their tenure.
- Post-Service “Cooling-Off” Period:
- Officials are prohibited from lobbying or consulting for companies they regulated or legislated for two years after leaving office.
- Financial Transaction “Cooling-Off” Period:
- Officials may not buy or trade individual stocks for a minimum of six months post-office, ensuring decisions made while in office do not lead to personal gain.
7. Oversight by Office of Government Financial Integrity (OGFI)
- Office Mandate and Authority:
- The OGFI will monitor and enforce compliance, conduct audits, and investigate any alleged violations. It will have authority to subpoena records, enforce divestment, and recommend sanctions.
- Annual Reports to Congress:
- The OGFI will submit an annual report detailing compliance rates, penalties issued, and any observed patterns of non-compliance.
Rationale and Expected Impact
This policy rigorously prevents government officials and their families from using their positions for financial gain by restricting stock ownership, requiring independent trust management, and setting severe penalties for violations. The law will reduce conflicts of interest, uphold public trust, and promote fairness in government decision-making.