Sell Your Stocks or Step Down Act
- Sponsor
- Rep. Vindman, Eugene Simon [D-VA-7]
- Committees
- Ways and Means Committee (primary)
- Last action
- Aug 31, 2026
Bottom line
The 'Sell Your Stocks or Step Down Act' aims to eliminate potential financial conflicts of interest for high-ranking government officials and their families by mandating divestment from most individual investments, backed by strict penalties and enhanced ethics office enforcement.
What it actually does
This bill prohibits a wide range of federal officials, including the President, Vice President, Members of Congress, senior executive branch officials, judicial officials, and their spouses and dependent children, from owning or trading individual stocks, digital assets, commodities, futures, event contracts, and comparable synthetic economic interests. It mandates divestment of existing prohibited investments within 30 days and imposes significant penalties for non-compliance, including daily fees and disgorgement of profits. Notably, it disallows the tax deferral typically available for conflict-of-interest sales.
Proponents argue
Proponents argue that this bill is essential to restore public trust in government by eliminating both actual and perceived financial conflicts of interest. They contend that public officials should be focused solely on serving the public good, free from any suspicion that their legislative or policy decisions could be influenced by personal financial gain. By requiring divestment, the bill ensures that officials cannot profit from information gained through their public service or from policies they help shape, thereby strengthening the integrity of democratic institutions.
Opponents contend
Opponents argue that the bill's broad restrictions, particularly those extending to spouses and dependent children and the denial of tax deferral for divestitures, are overly burdensome and could deter highly qualified individuals from seeking public service. They contend that existing ethics laws and disclosure requirements are sufficient to manage conflicts of interest, and that these new prohibitions represent an unnecessary intrusion into the private financial lives of public servants and their families, potentially leading to financial hardship and a less diverse pool of candidates for public office.
The bill is relatively short and straightforward, allowing an informed reader to grasp its core provisions and implications within the estimated reading time.
Section 1
Short Title
This section establishes the official short title of the Act as the 'Sell Your Stocks or Step Down Act'. This title is used for easy reference and public identification of the legislation, clearly communicating its primary intent to the public and other legislative bodies.
Supporters argue
Proponents argue that a clear and direct short title like 'Sell Your Stocks or Step Down Act' immediately conveys the bill's purpose, making it accessible and understandable to the public and facilitating public discourse on government ethics.
Critics contend
Critics might argue that such a provocative title is designed for political messaging rather than neutral legislative description, potentially prejudicing public perception of the bill's intent.
Tradeoffs
The tradeoff is between a descriptive, neutral title and one that is politically impactful and easily memorable, which can influence public perception.
Section 2(a), new 5 U.S.C. 13151(3)
Definition of 'Covered Individual'
This provision defines who is subject to the bill's restrictions. It includes the President, Vice President, Members of Congress, congressional officers and employees, a broad range of senior executive branch officials (including those above GS-15, Senior Executive Service, and chiefs of staff), and federal judicial officials (justices, judges, bankruptcy judges, magistrate judges). Crucially, it also extends these restrictions to the dependent children and spouses of all these individuals, significantly broadening the scope of those affected by the investment prohibitions.
Section 2(a), new 5 U.S.C. 13151(4)
Definition of 'Covered Investment' and Exclusions
This section defines what types of investments are prohibited. It broadly includes securities, commodities, futures, digital assets, event contracts, and synthetic interests (like derivatives). However, it also specifies several key exclusions: widely held, diversified, publicly traded investment funds; U.S. Treasury bills/notes/bonds; State or municipal government bills/notes/bonds; compensation received by a spouse or dependent child from their employer; interests in small business concerns; interests in LLCs for personal residence real estate; and specific Alaska Native Claims Settlement Act stock. These exclusions narrow the scope of the prohibition, allowing officials to hold certain types of diversified or government-backed assets.
Section 2(a), new 5 U.S.C. 13152(a) and (b)
Prohibition on Ownership and Trading; Divestment Requirement
This provision establishes the core prohibition: no covered individual may directly or indirectly own or trade a covered investment. To comply, individuals cannot purchase new covered investments and must divest (sell off) any existing covered investments within 30 days of the bill's enactment or within 30 days of becoming a covered individual. This creates a strict deadline for officials to liquidate their prohibited holdings, ensuring rapid compliance with the new rules.
Section 2(a), new 5 U.S.C. 13152(c)
Taxation of Divestitures (No IRC Section 1043 Application)
This critical provision explicitly states that Section 1043 of the Internal Revenue Code of 1986, which typically allows federal employees to defer capital gains taxes on assets sold to comply with conflict-of-interest requirements, will not apply to divestitures mandated by this Act. This means that covered individuals who sell their prohibited investments will be subject to capital gains taxes on any profits, rather than being able to roll those gains into approved investments without immediate tax liability.
Section 2(a), new 5 U.S.C. 13153
Penalties for Non-Compliance
This section outlines the penalties for violating the Act. If a covered individual fails to divest a covered investment by the deadline, they face a daily fee equal to 10 percent of the fair market value of the non-compliant portfolio, capped at 50 percent of that value. For purchasing or trading a prohibited investment, the penalty is a fee equal to the value of the investment plus $10,000, along with disgorgement of any profits. These penalties are deposited into the general fund of the Treasury for deficit reduction, and officials are explicitly prohibited from using appropriated funds or campaign contributions to pay them.
Section 2(a), new 5 U.S.C. 13153(e)
Enforcement Authority of Supervising Ethics Offices
This provision grants significant new enforcement powers to supervising ethics offices (e.g., the Office of Government Ethics, House and Senate Ethics Committees). These offices are authorized to determine, assess, and collect fees, issue administrative subpoenas to financial institutions for compliance records, and refer suspected violations to Inspectors General or the Attorney General. They can also collect fees through administrative offset against an individual's salary or pension, or refer cases for civil action if fees are unpaid. This significantly enhances the investigative and punitive capabilities of ethics watchdogs.
This provision explicitly states that Section 1043 of the Internal Revenue Code of 1986, which allows federal employees to defer capital gains taxes on assets sold to comply with conflict-of-interest requirements, will not apply to divestitures mandated by this Act.
Section 2(a), new 5 U.S.C. 13152(c)
Why it matters:While technically placed within the compliance section, the denial of a significant tax benefit could be seen as a politically sensitive detail that might attract less attention if not highlighted. It represents a substantial financial impact on affected individuals.
Case for: Proponents would argue that denying tax deferral ensures that public service does not confer any special financial advantage, even in the context of divestment, reinforcing the principle of public officials making financial sacrifices for public trust.
Case against: Opponents would contend that this provision imposes a severe financial penalty on individuals entering public service, potentially forcing them to incur large, immediate tax liabilities on long-held assets. This could discourage highly qualified individuals from serving.
Estimated impact: Potentially millions of dollars in additional tax revenue for the U.S. Treasury, and significant capital gains tax burdens for affected individuals with substantial investment portfolios.
This provision creates an occupational exception, allowing a spouse or dependent child of a covered individual to trade any covered investment if the investment is not owned by the covered individual and the trade is performed as a function of the spouse's or dependent child's primary occupation.
Section 2(a), new 5 U.S.C. 13152(d)
Why it matters:This exception is a practical necessity to avoid unduly penalizing families where a spouse or child works in the financial industry. Its placement is standard legislative practice for exceptions to general rules.
Case for: Proponents would argue this exception is a reasonable compromise that prevents undue hardship for families where a spouse or child has a legitimate financial profession, without creating a loophole for the covered official themselves.
Case against: Critics might argue that even with this exception, there remains a potential for indirect influence or information sharing within a household, creating a perceived or actual conflict of interest, even if the covered official doesn't directly own the asset.
Estimated impact: Mitigates the financial impact on potentially thousands of families where a spouse or dependent child has a career in finance, allowing them to continue their professional activities.