S-1498-119
Placed on Senate Legislative Calendar under General Orders. Calendar No. 294.
Sponsored by Josh Hawley (R-MO)
What it does
The HONEST Act would prohibit members of Congress, the President, and the Vice President — along with their spouses and dependent children — from purchasing, selling, or holding most individual securities, commodities, futures, digital assets, and derivatives. Covered officials who already hold such investments would be required to divest them within a set period after beginning a new term of service. Exemptions exist for diversified mutual funds, diversified exchange-traded funds, U.S. Treasury securities, state and municipal bonds, certain small business interests, and Alaska Native Claims Settlement Act stock. The bill also increases financial disclosure requirements and raises the fine for failing to file required transaction reports under the STOCK Act to $500 per violation.
Who benefits
The general public, which would gain greater confidence that legislative and executive decisions are not influenced by officials' personal investment positions. Retail investors and market participants who compete against officials with access to non-public policy information. Journalists, watchdog organizations, and transparency advocates who would benefit from enhanced public disclosure databases with searchable, downloadable data. Index fund and ETF providers, whose products would become the primary permissible investment vehicle for covered officials. Candidates for federal office who do not hold individual securities and would face no compliance burden.
Who is hurt
Current members of Congress, the President, the Vice President, and their spouses and dependent children who hold individual stocks, commodities, or other covered investments and would be required to divest — potentially at an unfavorable time or at a tax cost, though the bill provides a certificate of divestiture mechanism to defer capital gains taxes. Financial advisors and brokers who currently manage individual portfolios for covered officials and their families. Spouses of covered officials who work in finance or investment management and whose personal trading activity would be restricted. Candidates for federal office who hold complex investment portfolios and would face compliance costs and forced divestiture upon taking office. Smaller or less liquid investment positions may be harder to exit quickly without financial loss.
Supporters argue
Supporters argue that the existing STOCK Act (2012) has failed to prevent conflicts of interest because it only requires disclosure of trades, not divestiture, and its fines — as low as $200 — are too small to deter violations. They point to academic studies and media investigations documenting that members of Congress have, on average, outperformed the market, and that high-profile trading activity during sensitive legislative periods — including during the COVID-19 pandemic and debates over semiconductor legislation — has eroded public trust. They contend that a full ban, with meaningful civil penalties equal to the greater of a month's salary or 10% of the investment's value, is the only mechanism that eliminates the conflict rather than merely disclosing it.
Opponents argue
Opponents argue that a mandatory divestiture requirement imposes a significant financial burden on public servants and their families — including spouses who have independent careers in finance — and may deter qualified candidates with investment backgrounds from seeking office. They contend that the bill's broad reach to spouses and dependent children raises due process concerns, as those individuals have not taken public office and may have independent financial interests. Critics also argue that the existing STOCK Act framework, if properly enforced with stronger penalties, could address the problem without requiring forced asset sales, and that the bill's carve-outs — for diversified funds, bonds, and small businesses — create unequal treatment depending on how a covered official's wealth is structured.
Constitutional context
Congress has broad authority to regulate its own members' conduct under the Necessary and Proper Clause (Art. I, §8, cl. 18) and its inherent power of self-governance. The extension of restrictions to the President and Vice President raises a separation of powers question, as Congress is legislating conduct requirements for a co-equal branch. The application of divestiture mandates to spouses and dependent children — private individuals who hold no public office — could implicate the Takings Clause (5th Amendment) if forced sales are deemed to destroy property value without just compensation, a concern heightened by Cedar Point Nursery v. Hassid (2021)'s expanded reading of government-compelled property actions.
Checks and balances
Congress gains authority to restrict the investment conduct of its own members and, notably, the executive branch's top two officials; the supervising ethics offices (House and Senate Ethics Committees, and their executive equivalents) enforce compliance and impose civil penalties, while the bill's severability clause and judicial review provide a check on any provisions found unconstitutional.
Historical precedent
The STOCK Act of 2012 previously addressed congressional trading by requiring disclosure of transactions within 45 days but stopped short of a trading ban; it has been criticized for weak enforcement and has not been found to eliminate conflicts of interest.