Dismantling Investments in Violation of Ethical Standards through Trusts Act
Dismantling Investments in Violation of Ethical Standards through Trusts Act
Plain Language Summary
# Summary of HR 1599: Dismantling Investments in Violation of Ethical Standards through Trusts Act **What It Does:** This bill would restrict high-ranking federal employees—specifically those in Senior Executive Service positions—from owning certain types of investments while they work for the government. The restrictions would also apply to their spouses and dependent children. Prohibited investments include individual stocks, commodities, and complex financial instruments like derivatives. However, the restrictions wouldn't apply to diversified mutual funds, Treasury bonds, or money earned from a spouse or child's regular job. Affected employees would have 180 days to sell prohibited holdings. **Who It Affects & Key Provisions:** The bill targets roughly 6,000-8,000 senior federal executives across government agencies.
Its goal is to prevent conflicts of interest—ensuring that high-ranking officials make decisions based on the public interest rather than personal financial gain. The main exemptions allow for qualified blind trusts (where investments are managed without the employee knowing details), diversified investment funds, and investments below certain value thresholds. This approach aims to balance ethical concerns with practical realities of employee finances. **Current Status:** As of now, the bill remains in committee and has not been voted on by the full House. It was introduced by Republican Representative Michael Cloud of Texas.
CRS Official Summary
Dismantling Investments in Violation of Ethical Standards through Trusts ActThis bill prohibits a senior federal employee or an employee's spouse or dependent children from holding, purchasing, or selling certain financial instruments during the employee's term of service. (A senior federal employee is defined as any individual occupying a Senior Executive Service position.)Financial instruments covered by this prohibition include any investments in securities, security futures, commodities, or comparable economic interests acquired through synthetic means such as the use of derivatives. The prohibition does not apply to such instruments if they are held in a qualified blind trust or fall below certain value thresholds. Additionally, the prohibition does not apply to diversified mutual funds, diversified exchange-traded funds, specified Treasury debt securities, or compensation from the primary occupation of a spouse or child. The bill provides a 180-day window for individuals affected by the bill to sell any prohibited financial instruments.Any profit made in violation of the prohibition must be disgorged (given) to the Treasury and may subject the individual to a civil fine assessed by the supervising ethics office. A loss from a transaction or holding conducted in violation of this bill may not be deducted from the amount of income tax owed by the applicable senior federal employee, spouse, or dependent child.The bill requires each senior federal employee to annually certify compliance, including the compliance of the employee's spouse and dependent children. The Government Accountability Office must conduct a compliance audit.
Latest Action
Referred to the Committee on Oversight and Government Reform, and in addition to the Committee on Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.