In December 2018, Bill 3718 (the “Bill”) was introduced in the Senate and referred to Committee. The Bill, or the “Ban Conflicted Trading Act,” prohibits members of Congress and senior congressional staff from trading individual stocks and other investments while in office. Specifically, the Bill prohibits such covered persons from (1) purchasing or selling any security, commodity, future, or derivative and (2) entering into a transaction that creates a net short position in any security. Additionally, the Bill prohibits any covered person from serving as an officer or member of any board of any for-profit association, corporation, or other entity. Certain exceptions are set forth for investments that were held before taking office. Investments in diversified mutual funds or exchange-traded funds would still be allowed. On a case-by-case basis, the Select Committee on Ethics may authorize a covered person to place their securities holdings in a qualified blind trust approved by the Committee. Under the Bill, all members would have six months after enactment to divest their shares. New members would get six months from their entry into Congress to divest. Those who fail to comply with the Act would be subject to a civil penalty. Similar measures have been introduced in prior sessions of Congress; however, in light of recent enforcement activity, it’s fair to predict that this measure may be adopted. The Bill can be found in full here.
