SUMMARY

Financial Ethics in Government Act of 2011- Limits real and apparent conflicts between the financial interests of members of Congress and the exercise of their legislative powers, and provides options for addressing potential conflicts. The Actstrengthens House Ethics Rules aimed at preventing the sale, purchase or trade of stocks, bonds or commodities futures based onnonpublic information concerning pending legislation or actions, and creates new safeguards against the use of such nonpublicinformation for private profit.(1) Amends

Public Law 87-849 (18 U.S.C. 208), which restricts members of the executive branch from making decisions basedon financial interests, to include members and employees of the Legislative Branch. Members of Congress and staff who believethat a hearing, vote proceeding, application, request for a ruling or other determination, or other particular matter may constitutea financial conflict of interest, shall notify the Committee on Standards of Official Conduct or the Select Committee on Ethics of the nature and circumstances. Such members of Congress or staff may receive a written finding from the Committee onStandards of Official Conduct or the Select Committee on Ethics indicating that such a financial interest is too small as toconstitute a conflict of interests.(2) Amends the Rules of the House of Representatives in order to oblige all members of Congress and staff to place theirportfolio of stocks and bonds in either a qualified blind trust (as defined in section 102 of the Ethics in Government Act of 1978)or a publicly traded mutual fund before taking office or beginning work. Incumbent members of Congress and continuingemployees shall comply with the provisions of this act between November 7

2012, the date this Act shall take effect, and thestart of the 113

Congress.Amends section 501 of the Ethics in Government Act of 1978 in order to require all members of Congress and staff to place suchassets in a qualified blind trust or publicly traded mutual fund by classifying the ownership of such assets as ‘outside earnedincome,’ and forbids members of Congress and staff from acquiring such assets during their tenure. If a member of Congress orstaff member acquires such assets through actions or events beyond their control, such as through inheritance, they will berequired to dispose of such assets either through sale or through placement in either a qualified blind trust or a publicly tradedmutual fund.(3) Amends the Securities Exchange Act of 1934 to preclude members of Congress or staff from using nonpublic informationobtained through their official functions for the purpose of investing in securities or entering into a securities-based swapagreement. Individuals are also restricted from using such information obtained from a member of Congress or staff member forinvestment purposes.Amends the Commodities Exchange Act of 1936 to prohibit members of Congress or staff from engaging in commoditiesfutures trading if such decisions are based on nonpublic information obtained by reason of such person being a member oremployee of the United States Congress. Individuals are also restricted from using such information obtained ex parte for thepurposes of sale, purchase or trade of stocks, bonds or commodities futures.Amends the Rules of the House of Representatives to restrict the dissemination of nonpublic information by members of Congress or staff if such person has reason to believe that the information would be used in connection with the sale or purchaseof securities or in the sale or purchase of a commodity for future delivery.

RESHMA SAUJANI FOR CONGRESS

Financial Ethics in Government Act of 2011 (Introduced in House)

HR ****112th CONGRESS1st Session

H. R. ****

To limit real and apparent conflicts between the financial interests of members of Congress and the exercise of their legislativepowers.

IN THE HOUSE OF REPRESENTATIVES

January 3, 2011

Ms. SAUJANI will introduce the following bill; which will be referred to the Committee on Standards of Official Conduct, andin addition to the Committees on Financial Services, House Administration, the Judiciary, and Agriculture, for a period to besubsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of thecommittee concerned.

A BILL

To limit real and apparent conflicts between the financial interests of members of Congress and the exercise of their legislativepowers.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SEC. 1. SHORT TITLE.

This Act may be cited as the ‘Financial Ethics in Government Act’.

SEC. 2. FINDINGS AND PURPOSE.

(a) FINDINGS— THE CONGRESS FINDS—(1) Real and apparent conflicts arise between the financial interests of members of Congress and the exerciseof their legislative powers.(2) Such financial conflicts of interest impede the ability of members of Congress to effectively execute theirconstitutional responsibilities.(b) PURPOSE— IT IS THE PURPOSE OF THE ACT TO—(1) Prevent members of Congress exercising their constitutional powers in a matter in which they have afinancial interest.(2) Require members of Congress to place their securities' investments in a qualified blind trust or in publiclytraded mutual funds.(3) Eliminate trading on material nonpublic information relating to any pending or prospective legislativeaction.

SEC. 3. Acts Affecting a Financial Interest.

(a) Subsection (a) of section 208 of Public Law 87-849 is amended--(1) by inserting ‘or a member or employee of the legislative branch of the United States Government’ after ‘an officeror employee of the executive branch of the United States Government’; and

RESHMA SAUJANI FOR CONGRESS

(2) by inserting ‘a committee hearing, a legislative vote’ after ‘the rendering of advice’.(b) Subsection (b) of section 208 of Public Law 87-849 is amended by adding at the end the following new paragraphs:‘(5) if the member or employee of Congress first advises the Committee on Standards of Official Conduct orthe Select Committee on Ethics of the nature and circumstances of the hearing, vote, proceeding, application,request for a ruling or other determination, or other particular matter and makes full disclosure of the financialinterest and receives in advance a written determination made by the Committee on Standards of OfficialConduct or the Select Committee on Ethics that the interest is not so substantial as to be deemed likely toaffect the integrity of Congress; or‘(6) if, by general guidance issued by the Committee on Standards of Official Conduct or by the SelectCommittee on Ethics, applicable to all or a portion of the members or employees of Congress covered by thissection, the financial interest has been exempted from the requirements of subsection (a) as being too remoteor too inconsequential to affect the integrity of Congress to which the general guidance applies.’

SEC. 4. Qualified Blind Trusts or Publicly Traded Mutual Funds.

(a) Rule XXIII (known as the ‘Code of Official Conduct’) of the Rules of the House of Representatives is amended byredesignating clause 18 as clause 19 and by inserting after clause 17 the following new clause:‘18. A Member, Delegate, Resident Commissioner, officer, or employee of the House shall, before taking theoath of office and until they leave office, place all of his or her personal investments of stocks and bonds intopublicly traded mutual funds or into a qualified blind trust as defined in section 102 of the Ethics inGovernment Act of 1978, subject to the following rules:‘(a) during a Member’s, Delegate’s, Resident Commissioner’s, officer’s, or employee of the House’sterm of office or employment, he or she may not voluntarily acquire any personal investment in astock or bond except in the form of publicly traded mutual funds;‘(b) if a Member, Delegate, Resident Commissioner, officer, or employee of the House acquires afinancial interest in the stock or bond of a business entity during their term of office or employmentdue to events or actions beyond their control, they shall immediately sell the financial interest or placethe financial interest in a publicly traded mutual fund; and‘(c) if a Member, Delegate, Resident Commissioner, officer, or employee of the House is appointed totheir position, or if they are elected to their position by special election, then they shall have 60 daysfrom the date of such appointment or special election to place all of his or her personal investments of stocks and bonds into a publicly traded mutual fund or qualified blind trust.’(b) Section 501(a) of the Ethics in Government Act of 1978 (5 App. U.S.C. 501(a)) is amended by adding at the end thefollowing new paragraph:‘(3) A Member, Delegate, Resident Commissioner, officer, or employee of Congress shall, before taking theoath of office and until they leave office, place all of his or her personal investments of stocks and bonds into apublicly traded mutual fund or a qualified blind trust as defined in section 102 of the Ethics in Government Actof 1978, subject to the following rules:‘(1) During a Member’s, Delegate’s, Resident Commissioner’s, officer’s, or employee of Congress’sterm of office or employment, he or she may not voluntarily acquire any personal investment in astock or bond except in the form of publicly traded mutual funds; and‘(2) if a Member, Delegate, Resident Commissioner, officer, or employee of Congress acquires afinancial interest in the stock or bond of a business entity during their term of office or employmentdue to events or actions beyond their control, they shall immediately sell the financial interest or placethe financial interest in a publicly traded mutual fund.’(c) Section 102(f)(3)(C) of the Ethics in Government Act of 1978 (5 App. U.S.C. 102(f)(3)(C)) is amended--(1) in subsection (iii)--