S.1498 - Preventing Elected Leaders from Owning Securities and Investments (PELOSI) Act (119th Congress)
Summary
The PELOSI Act (Preventing Elected Leaders from Owning Securities and Investments Act) aims to amend Title 5 of the United States Code to prohibit Members of Congress and their spouses from holding, purchasing, or selling certain financial instruments during their term of service. The bill defines 'covered financial instruments' broadly, including securities, security futures, and commodities, but excludes diversified mutual funds, exchange-traded funds, and U.S. Treasury bills, notes, or bonds. The Act includes provisions for compliance certification, penalties for violations (disgorgement of profits and civil fines), and audits by the Government Accountability Office (GAO).
Expected Effects
If enacted, the PELOSI Act would significantly restrict the financial activities of Members of Congress and their spouses. This could lead to increased public trust by reducing potential conflicts of interest and the appearance of insider trading. The Act also establishes mechanisms for enforcement and oversight, including annual compliance certifications and audits.
Potential Benefits
- Reduced potential for conflicts of interest: By restricting financial transactions, the Act aims to prevent Members of Congress from using their positions for personal financial gain.
- Increased public trust: The Act could enhance public confidence in government by addressing concerns about insider trading and self-dealing.
- Enhanced transparency: The requirement for annual compliance certifications and public disclosure of fines increases transparency.
- Strengthened ethical standards: The Act promotes higher ethical standards for elected officials.
- Discourages corruption: The penalties for non-compliance, including disgorgement of profits and civil fines, act as a deterrent to unethical behavior.
Potential Disadvantages
- Potential for reduced investment: Some argue that restricting investment options may discourage qualified individuals from seeking public office.
- Compliance burdens: The Act may create administrative burdens for Members of Congress and the supervising ethics committees.
- Possible legal challenges: The scope of the restrictions could face legal challenges based on privacy or property rights.
- Limited scope: The Act focuses solely on financial transactions and may not address other forms of potential conflicts of interest.
- Enforcement difficulties: Determining whether a transaction was based on inside information can be challenging, potentially hindering enforcement.
Constitutional Alignment
The PELOSI Act's constitutionality is complex. Congress has broad authority to regulate its members' conduct under Article I, Section 5, which allows each house to determine the rules of its proceedings and punish its members for disorderly behavior. However, the Act's restrictions on financial activities could be challenged under the Fifth Amendment's Due Process Clause or the Takings Clause, if the restrictions are deemed overly broad or confiscatory. The First Amendment implications are minimal, as the Act primarily regulates financial transactions rather than speech or expression.
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).