HR-6731-119
Referred to the Committee on Oversight and Government Reform, and in addition to the Committees on House Administration, and 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.
Sponsored by Seth Magaziner (D-RI)
What it does
This bill would prohibit Members of Congress, the President, the Vice President, and their spouses and dependent children from owning or trading individual stocks, commodities, futures, and derivatives. Covered individuals who already hold such investments would be required to divest within 180 days of enactment (or 90 days of taking office for future officeholders). Exemptions would apply to diversified mutual funds and ETFs, U.S. Treasury securities, state and municipal bonds, small business interests, and certain family trusts not controlled by the covered individual. Violations would result in a 10% fee on the value of the investment and forfeiture of any profits to the U.S. Treasury.
Who benefits
The general public, who would gain greater assurance that legislative and executive decisions are not influenced by personal financial interests. Investors and market participants broadly, who may benefit from reduced information asymmetry if officials can no longer trade on policy knowledge. Diversified fund managers (e.g., index fund companies), whose products would become the primary permissible investment vehicle for covered officials. Ethics watchdog organizations, whose oversight role would be reinforced. Challengers in future elections who could use compliance records as a transparency benchmark.
Who is hurt
Members of Congress, the President, the Vice President, and their spouses and dependent children who currently hold individual stocks or other covered investments and would be forced to sell, potentially at an inopportune time. Financial advisors and brokers who currently manage portfolios for these officials and their families, who would lose that business. Spouses and dependent children with independent investment careers may face restrictions on their own holdings (though an occupational exception exists for trades made as part of their primary job). Candidates considering public office who may be deterred by the divestiture requirement. Smaller or less liquid investment holders among covered individuals who may face difficulty meeting divestiture deadlines despite extension provisions.
Supporters argue
Supporters argue that the current system creates a structural conflict of interest: Members of Congress routinely vote on legislation — from pharmaceutical regulation to defense contracts to tech antitrust — while holding individual stocks in the very industries they oversee. They point to academic studies, including a 2021 analysis published in the Journal of Financial Economics, finding that members of the House Financial Services Committee outperformed the market in financial sector stocks. Supporters contend that a blanket prohibition, rather than a disclosure-only regime, is the only reliable way to eliminate the incentive to trade on non-public policy information and restore public confidence in government decision-making.
Opponents argue
Opponents argue that a mandatory divestiture requirement raises serious constitutional questions about the government compelling officials to sell private property, potentially implicating the Takings Clause of the Fifth Amendment if forced sales occur at a loss or under unfavorable market conditions. They also contend that the restriction could deter qualified candidates — particularly those with business backgrounds — from seeking federal office, narrowing the talent pool available to voters. Critics further argue that existing disclosure laws under the STOCK Act (2012) already address the core transparency concern, and that enforcement of those existing rules, rather than an outright ban, would be a less restrictive means of achieving the same goal.
Constitutional context
The bill's divestiture mandate could implicate the Takings Clause of the Fifth Amendment, which requires just compensation when the government compels the disposition of private property — though courts have generally held that conditions on holding public office do not constitute a taking. The bill partially addresses this by providing Certificates of Divestiture under IRC §1043, which allow tax-deferred treatment of forced sales, mitigating but not eliminating potential financial harm. No Commerce Clause or major questions doctrine issues arise, as this is a direct congressional act regulating the conduct of federal officeholders rather than an agency rule.
Checks and balances
Congress would restrict its own members' financial conduct, as well as that of the executive branch; the supervising ethics offices (House Ethics Committee, Senate Ethics Committee, and executive branch equivalents) would administer and enforce the rules, with penalties payable to the Treasury and publicly disclosed online.
Historical precedent
The STOCK Act of 2012 previously addressed congressional stock trading by requiring disclosure of trades within 45 days but stopped short of prohibiting ownership; this bill would go significantly further by mandating full divestiture.