The PELOSI Act Bans Stock Trading for Congress and Spouses: 180 Days to Sell Off Portfolios

This bill, officially titled the Preventing Elected Leaders from Owning Securities and Investments (PELOSI) Act, is designed to shut down conflicts of interest by banning Members of Congress and their spouses from holding, buying, or selling individual stocks, security futures, or commodities while the Member is in office. Essentially, if an investment is something you can actively trade for profit based on market movement, it’s covered by this ban.

The New Rules of the Hill

For anyone serving in Congress, or their spouse, this means a total freeze on trading individual company stocks. The idea is to prevent elected officials from using non-public information—the kind they get while writing laws—to make personal financial gains. Think of it this way: if a Member of Congress is voting on a massive infrastructure bill, they shouldn't be allowed to buy up stock in the concrete company that's about to get a huge federal contract. That’s the core problem this bill aims to solve.

Crucially, the bill doesn't force Members to live under a mattress. It specifically exempts diversified investments, which are the financial equivalent of putting all your eggs in many baskets. This includes diversified mutual funds, diversified exchange-traded funds (ETFs), and U.S. Treasury bills and bonds. If you’re a Member of Congress when this law passes, or you’re newly elected, you get a 180-day grace period to get compliant and sell off any prohibited investments. If you don't, things get expensive fast.

The Cost of Non-Compliance

If a Member or their spouse breaks these rules, the penalties are designed to sting. First, any profit made from an illegal trade must be returned directly to the U.S. Treasury—a process called disgorgement. Second, the relevant ethics committee (House or Senate) can hit the Member with a civil fine. This isn't a slap on the wrist; the penalty is 10 percent of the value of each prohibited investment, and that 10 percent penalty is charged every 30 days until the asset is sold. If a Member is sitting on $500,000 worth of prohibited stock, that’s a $50,000 fine every month until they comply. The ethics committees must also publicly post details about any fine assessed, ensuring transparency.

The Spouse Loophole and Oversight

There’s one provision that might raise an eyebrow: the ban does not cover income or investments tied to a spouse’s or dependent child’s “primary job.” This exemption is designed to avoid penalizing a spouse who works in finance or runs a business, but the term “primary job” isn't defined, which could create a loophole allowing complex, actively managed portfolios to be shielded if they are vaguely tied to a spouse's employment. This is an area where the ethics committees will have to provide clear guidance.

To ensure compliance, Members must submit an annual certification to their ethics committee confirming they’ve followed the rules, and the Government Accountability Office (GAO) is tasked with auditing this compliance every two years. This puts real teeth into the enforcement side, making sure the rules aren't just for show.