No Profiting from Public Service Act
- Sponsor
- Rep. McDonald Rivet, Kristen [D-MI-8]
- Committees
- Ways and Means Committee (primary)
- Last action
- Jun 30, 2026
Bottom line
The "No Profiting from Public Service Act" aims to prevent conflicts of interest by broadly restricting financial trading and ownership for federal officials and their families, and for certain federal employees, imposing divestiture requirements and penalties for non-compliance.
What it actually does
This bill prohibits federal officials, their spouses, and dependent children from owning or trading "covered investments" such as individual stocks, commodities, futures, and derivatives, with specific exceptions for diversified funds and blind trusts. It also bans federal officials and certain federal employees from engaging in prediction market contracts related to political or governmental events. The bill mandates divestiture of prohibited assets within 90 days and imposes financial penalties for violations.
Proponents argue
Supporters argue that this bill is essential for enhancing public trust in government by eliminating both actual and perceived conflicts of interest. They contend it ensures that public servants are focused on the public good, rather than personal financial gain influenced by their official positions or access to information, thereby strengthening the integrity of federal service.
Opponents contend
Opponents might argue that the restrictions are overly broad and infringe upon the financial privacy and investment freedom of public servants and their families. They could also contend that such stringent financial limitations might deter highly qualified individuals from seeking or accepting federal office, potentially narrowing the pool of talent available for critical government roles.
The bill is relatively short and clearly structured, making it accessible for a reader to understand its core provisions and implications within a reasonable timeframe.
Section 2(a) and (b)
Establishment of Restrictions on Financial Trade and Ownership Subchapter
This section establishes a new Subchapter IV within Chapter 131 of Title 5, United States Code, titled "Restrictions on Financial Trade and Ownership." This new subchapter serves as the foundational legal framework for all the bill's prohibitions, definitions, and penalties concerning financial conduct for federal officials and certain employees, thereby creating a new ethical regime.
Supporters argue
Supporters argue that establishing a clear, dedicated subchapter within federal law provides a robust and transparent framework for ethical conduct, making the rules easily identifiable and enforceable for all affected parties.
Critics contend
No specific opposition is typically raised against the structural amendment itself, though opposition exists for the content it introduces.
Tradeoffs
The primary tradeoff is the administrative effort required to integrate and enforce a new subchapter versus the benefit of a clear, dedicated legal structure for comprehensive ethical guidelines.
Section 2(b), new Section 13151
Key Definitions for Financial Restrictions
This section defines critical terms such as "commodity," "covered individual," "covered official," "covered investment," "diversified," "future," "political appointee," "prediction market contract," "prohibited action," "qualified blind trust," "security," "small business concern," and "supervising ethics office." These definitions are crucial for precisely understanding who and what is subject to the bill's restrictions and exceptions, thereby delineating its scope.
Section 2(b), new Section 13152(a)
Prohibition on Covered Investment Ownership and Trading
This core provision prohibits "covered officials" (including Members of Congress, judicial officers, the President, Vice President, Executive Schedule appointees, and their spouses/dependent children) from directly or indirectly owning or trading "covered investments." Covered investments encompass securities, commodities, futures, or comparable economic interests, with specific exclusions for diversified funds, qualified blind trusts, U.S. Treasury bonds, and certain small business interests.
Section 2(b), new Section 13152(b)
Prohibition on Prediction Market Contracts for Political Events
This provision specifically prohibits both "covered officials" and "covered individuals" (which includes congressional staff, judicial employees, political appointees, and candidates for federal office) from entering into prediction market contracts. This ban applies to contracts tied to the occurrence, non-occurrence, or extent of a specific political or governmental event, action, or policy, aiming to prevent financial betting on policy outcomes.
Section 2(b), new Section 13152(c)
Mandatory Divestiture and Post-Service Restrictions
This section outlines the compliance mechanism for the covered investment ban, requiring covered officials to divest (sell at fair market value) or place covered investments into a qualified blind trust within 90 days of the bill's enactment or becoming a covered official. It also mandates a 180-day post-separation period during which former officials cannot dissolve blind trusts or engage in prohibited activities, aiming to prevent post-service influence.
Section 2(b), new Section 13152(d)
Occupational Exception for Spouses' and Dependent Children's Trades
This provision creates an exception allowing a spouse or dependent child of a covered official to trade a covered investment if that investment is not owned by the covered official and the trade is performed as a function of the spouse's or dependent child's primary occupation. This aims to prevent the bill from unduly restricting the legitimate professional activities of family members.
Section 2(b), new Section 13153
Penalties for Violations
This section outlines the penalties for violating the financial restrictions, including a fine equal to 10% of the value of the covered investment or prediction market contract, and disgorgement of any profits from illegal transactions. It also prohibits deducting losses from such illegal activities for income tax purposes and specifies that penalties cannot be paid from official allowances or campaign contributions, ensuring personal accountability.
The definition of "commodity" explicitly excludes "precious metal" and "a prediction market contract." This means that ownership or trade of physical precious metals (like gold, silver) is not restricted under the general "covered investment" ban, and prediction market contracts are handled separately under their own specific prohibition.
Section 13151(1)(B)
Why it matters:This is standard legislative practice to define terms precisely and carve out specific exceptions within definitions. It likely aims to avoid unintended consequences for traditional assets not typically associated with insider trading.
Case for: Proponents would argue this allows officials to hold traditional inflation hedges like physical precious metals, which are generally not seen as prone to insider trading or market manipulation in the same way as securities or futures. Prediction market contracts are addressed by a separate, specific prohibition.
Case against: Some critics might argue that even precious metals could be subject to market manipulation or benefit from certain policy decisions, and thus should not be entirely excluded from scrutiny.
Estimated impact: Allows officials to retain or acquire physical precious metals without divestiture, providing a limited investment avenue outside the primary restrictions.
The definition of "covered investment" excludes "an interest in a small business concern" and, for family farms or ranches, "a future or commodity directly related to the farming activities and products of the farm or ranch." This means officials can retain ownership in small businesses, including family farms, and engage in related commodity/future trading for those farms.
Section 13151(4)(B)(viii)
Why it matters:This is standard legislative practice to define terms precisely and carve out specific exceptions within definitions, likely to protect family businesses and farms from forced divestiture for public servants.
Case for: Proponents would argue this prevents public service from forcing individuals to divest from family businesses or farms, which are often integral to their family's livelihood and not typically vehicles for insider trading in the same way as publicly traded securities.
Case against: Critics might argue that even small businesses can benefit from policy decisions, and that the "directly related" clause for farms could be difficult to enforce or potentially exploited.
Estimated impact: Protects family-owned businesses and farms from forced divestiture for public servants, mitigating a significant personal burden for affected individuals.
The bill explicitly excludes "any share of Settlement Common Stock issued under section 7(g)(1)(A) of the Alaska Native Claims Settlement Act (43 U.S.C. 1606(g)(1)(A))" and "any share of Settlement Common Stock, as defined in section 3 of the Alaska Native Claims Settlement Act (43 U.S.C. 1602)" from the definition of "covered investment."
Section 13151(4)(B)(x) and (xi)
Why it matters:This is a highly specific carve-out for a unique type of stock ownership related to Alaska Native corporations, likely included to avoid unintended consequences for Alaska Native individuals who might become covered officials, recognizing the unique nature of these holdings.
Case for: Proponents would argue this ensures that individuals who are beneficiaries of the Alaska Native Claims Settlement Act are not forced to divest their heritage-related stock if they enter public service, respecting the cultural and economic significance of these holdings.
Case against: No specific opposition is typically raised against this highly specific and culturally sensitive exclusion.
Estimated impact: Protects a specific type of asset for a limited number of individuals, ensuring their participation in public service does not require divesting culturally significant holdings.
This section mandates supervising ethics offices to issue "certificates of divestiture" but explicitly states that "a covered official shall not be treated as an eligible person described in section 1043(b)(1)(A) of such Code" for purposes of Section 1043 of the Internal Revenue Code of 1986. Section 1043 typically allows for deferral of capital gains tax on sales of property to comply with conflict-of-interest requirements. By excluding officials from this eligibility, the bill ensures that officials must pay capital gains taxes on any profits from forced divestiture.
Section 13152(e)
Why it matters:This is a deliberate policy choice regarding the financial burden of divestiture, placed in a technical manner that might avoid direct political debate on the tax implications of forced sales.
Case for: Proponents would argue that officials should not receive a tax break for complying with ethical requirements, and that paying capital gains tax on divestment profits aligns with the principle of "no profiting from public service."
Case against: Opponents might argue that forcing divestiture without the tax deferral incentive places an undue financial burden on individuals entering public service, potentially making it less attractive for those with significant investment portfolios.
Estimated impact: Could result in significant capital gains tax liabilities for officials with appreciated assets, potentially discouraging some from public service due to the financial cost of compliance.