New ETHICS Act Bans Congressional Stock Trading, Forces Blind Trusts, and Imposes $500 Fines for Missed Reports

This bill, officially called the Ending Trading and Holdings in Congressional Stocks (ETHICS) Act, is a major overhaul of how Members of Congress, their spouses, and their dependent children handle their investments. Simply put, it bans them from buying or selling individual stocks, commodities, or futures—what the bill calls “covered investments”—starting immediately upon enactment. If they already own these things, they generally have to sell them off or put them into a government-approved “qualified blind trust” within 120 days.

The Mandate: No More Day Trading on the Hill

For anyone who’s ever watched the stock market and wondered if lawmakers were getting an unfair edge, this section is the big answer. The ETHICS Act mandates that covered investments—which include stocks and derivatives—must be managed completely out of the Member’s control. A “qualified blind trust” is exactly what it sounds like: a trust where the beneficiary (the Member) has no idea what’s being bought or sold inside it. If a Member chooses not to use a blind trust, they must completely divest (sell off) their covered investments within 90 days of the bill becoming law (SEC. 2).

Crucially, this isn’t just about the Member of Congress. It extends to their spouse and dependent children. Think about a spouse who works in tech and gets company stock options; those would likely fall under the ban unless they qualify for a narrow exemption tied to primary employment. After the law takes effect, the spouse and dependent children together can’t hold more than $10,000 worth of covered investments outside of these mandated arrangements. This means a lot of families will have to completely restructure their personal finances, moving away from individual stock picking and into diversified mutual funds or ETFs, which are specifically excluded from the ban.

The Illiquid Investment Problem

The bill is very clear on one thing that could cause major headaches for some Members: you cannot put “illiquid investments” into a qualified blind trust. An illiquid investment is something that’s hard to sell quickly, like an interest in a private fund or certain complex assets. If a Member or their family owns one of these, they are forced to sell it within 90 days of when they are legally allowed to sell it (SEC. 2). For the regular person, this is like being told you must sell your house in a bad market or liquidate your stake in a small, privately held business on short notice. Since they can’t use a blind trust as a holding pattern, this provision could force significant financial losses for those holding complex assets.

New Teeth for the STOCK Act

Beyond the blind trust mandate, the ETHICS Act strengthens existing transparency laws. Currently, the STOCK Act requires lawmakers to report their stock trades shortly after they happen. If they miss the deadline, the penalty is often waived or minimal. Under the ETHICS Act, missing a required trade report now comes with a mandatory fine of $500 for every missed filing (SEC. 3). This is a game changer. It means the consequence for sloppy or late reporting is immediate and automatic, adding real financial teeth to the current rules.

Making Sunlight Searchable

For the average citizen trying to follow along, Section 4 is huge. Right now, finding a politician’s financial disclosure forms can be like digging through a digital attic—the information is there, but it’s often in hard-to-read PDFs. This bill requires that all financial disclosure forms filed by Members and candidates be posted online in a searchable, sortable, and downloadable format, accessible via an API (Application Programming Interface). Think of it this way: instead of having to manually flip through hundreds of pages, you’ll be able to instantly search for every time a Member reported owning stock in, say, “Tesla” or “Boeing.” This doesn’t just increase transparency; it makes accountability practical for watchdog groups and the public alike.

What Happens If They Don’t Comply?

This bill doesn’t pull any punches on enforcement. If a Member fails to get into compliance—meaning they don’t sell their stocks or move them into a blind trust on time—the ethics office must issue a warning. If noncompliance continues for 30 days after that warning, the Member gets hit with a civil penalty assessed every 30 days. The penalty is the greater of: 1) the Member’s monthly pay, or 2) 10% of the value of the non-compliant investment (SEC. 2). That’s a serious financial incentive to follow the rules, linking the penalty directly to the Member’s salary or the size of the problematic investment.