H.R.3388 - Preventing Elected Leaders from Owning Securities and Investments (PELOSI) Act (119th Congress)
Summary
H.R.3388, the "Preventing Elected Leaders from Owning Securities and Investments (PELOSI) Act," aims to amend Title 5 of the United States Code to prohibit Members of Congress and their spouses from trading certain financial instruments during the Member's term of service. The bill defines "covered financial instruments" broadly, including securities, futures, and commodities, but excludes diversified mutual funds, ETFs, and U.S. Treasury securities. It establishes penalties for violations, including disgorgement of profits and civil fines.
The bill also requires annual compliance certifications from Members of Congress, to be published on a publicly available website. Supervising ethics committees are granted the authority to implement and enforce the requirements, including issuing rules and assessing fines. The Government Accountability Office (GAO) is mandated to conduct an audit of compliance within two years of enactment.
In short, this bill seeks to address concerns about potential insider trading and conflicts of interest among members of Congress. It aims to increase transparency and accountability in financial dealings of elected officials.
Expected Effects
If enacted, this bill would significantly restrict the investment options available to members of Congress and their spouses. It would likely lead to divestment from individual stocks and other specified assets. The bill will also increase scrutiny of their financial activities.
It could reduce public perception of corruption and increase trust in government. However, it may also face challenges in enforcement and could potentially deter qualified individuals from seeking public office.
Overall, the bill would change the financial landscape for members of congress and their families, and may have a positive impact on the public's trust in government.
Potential Benefits
- Increased public trust: By restricting financial transactions, the bill aims to reduce the potential for conflicts of interest and insider trading, thereby boosting public confidence in government.
- Greater accountability: The requirement for annual compliance certifications and public disclosure enhances transparency and holds members of Congress accountable for their financial dealings.
- Fairer markets: Preventing members of Congress from trading on non-public information could contribute to a more level playing field for all investors.
- Reduced potential for corruption: The restrictions could deter members of Congress from making decisions based on personal financial gain.
- Strengthened ethical standards: The bill reinforces ethical standards for elected officials, promoting integrity in government.
Potential Disadvantages
- Potential for reduced investment returns: Restrictions on investment options may limit the ability of members of Congress and their spouses to achieve optimal financial returns.
- Enforcement challenges: Ensuring compliance and effectively enforcing the provisions of the bill could prove difficult for supervising ethics committees.
- Possible deterrent to public service: The financial restrictions may discourage some qualified individuals from seeking public office.
- Complexity of compliance: Navigating the complexities of the regulations and determining which financial instruments are prohibited could be burdensome.
- Potential for unintended consequences: The broad definition of "covered financial instruments" may inadvertently capture legitimate investments.
Constitutional Alignment
The bill's constitutional alignment is complex. Congress has broad authority to regulate its members under Article I, Section 5, which allows each house to determine the rules of its proceedings and punish its members for disorderly behavior. The bill could be seen as an exercise of this power to ensure ethical conduct.
However, potential challenges could arise under the Fifth Amendment, which protects against the taking of private property without just compensation, if the restrictions are deemed too onerous. The First Amendment could also be invoked if the restrictions are argued to unduly infringe on personal freedoms.
Ultimately, the constitutionality of the PELOSI Act would likely depend on whether the restrictions are narrowly tailored to address a specific compelling government interest, such as preventing corruption and maintaining public trust.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).