Congress Stock Ban Bill Requires Divestment in 180 Days, Hits Spouses’ Investments Too

The aptly named Preventing Elected Leaders from Owning Securities and Investments (PELOSI) Act is here to address one of the biggest sources of public cynicism: the idea that people in Congress are using insider knowledge to play the stock market. This bill aims to stop that dead in its tracks by banning Members of Congress and their spouses from owning or trading most individual stocks and similar investments while the Member is serving.

The New Rules of the Investment Game

Under this proposal, if you’re a Member of Congress or married to one, you can’t hold, buy, or sell any “covered financial instrument.” That term includes individual stocks, security futures, commodities, and complex financial tools like options or warrants. It’s a broad prohibition designed to eliminate conflicts of interest where a legislator might vote on a law that directly impacts a company they own shares in. However, the bill does specifically carve out exceptions for common, diversified, and generally safer investments: you can still hold diversified mutual funds, diversified exchange-traded funds (ETFs), and U.S. Treasury bills or bonds. This means Members don’t have to stick their cash under a mattress; they just have to choose investments that don’t give them a direct stake in the companies they regulate.

The 180-Day Clock and the Spouse Factor

For current Members, the bill sets a firm deadline: they have 180 days from the law's enactment to sell off any prohibited assets. New Members coming into office get the same 180-day grace period from their first day of service. This is the bill’s critical path for implementation, and it’s a tight one for anyone with a complex portfolio. Crucially, the ban extends to the Member’s spouse. This is a huge detail because it means the financial autonomy of the spouse is restricted, preventing the Member from simply transferring their portfolio to their partner to skirt the rules. While the spouse’s income from their primary job is exempt, their personal investment choices are now tied to their partner’s public service.

Enforcement: Hit Them Where It Hurts

To ensure compliance, the bill gives the House and Senate ethics committees the power to enforce the rules—and they’ve been given some teeth. If a prohibited transaction occurs, the Member must “disgorge” (give up) all profits to the U.S. Treasury. If a Member fails to divest within the 180-day window, the ethics committee must impose a civil fine of 10 percent of the value of the non-divested instrument. This fine is not a one-time thing; additional penalties must be assessed every 30 days until compliance is achieved. Every year, each Member must also submit a written certification confirming compliance, and these certifications must be published on a public website. This pushes compliance out into the open, adding another layer of accountability.

The Catch: Who Watches the Watchmen?

While the penalties are serious, there are a couple of provisions that could complicate enforcement. First, the ethics committees are authorized to grant “reasonable extensions for good-faith divestment efforts.” This is vague and could be used to delay action, especially if a Member claims market conditions made selling difficult. Second, if a fine is imposed, the Member has the right to appeal it to a vote on the floor of their chamber. This means the final decision on a fine could turn into a political vote, potentially allowing political allies to shield a colleague from penalties rather than ensuring strict adherence to the rules. This appeal process could politicize what should be a straightforward enforcement matter. Finally, the Government Accountability Office (GAO) is required to audit Member compliance and report back within two years of the law taking effect, ensuring there is an independent check on how well these new rules are actually working.