What changed between these versions
A complete substitute amendment. v2 significantly expands the scope of the prohibition on financial instrument transactions to include the President and Vice President, renames the prohibited assets to "covered investments" with new exclusions, and introduces a mandatory divestment framework for existing holdings, including qualified blind trusts. It also adds new sections on STOCK Act noncompliance penalties and electronic filing requirements for financial disclosures.
Overview
Extensive changes throughout the bill, indicating a complete substitute amendment. · v2 fundamentally restructures and significantly expands the scope of the original bill, transforming it into a broader ethics reform measure that includes the executive branch and enhanced transparency provisions.
v2 is a complete substitute amendment that fundamentally alters the scope and mechanisms of the original bill. The most significant change is the expansion of the prohibition on owning and trading certain financial instruments from only Members of Congress and their spouses to also include the President, Vice President, and their dependent children. It redefines the prohibited assets as "covered investments" with a more detailed list of inclusions and exclusions, and introduces a mandatory divestment process for existing holdings, including the eventual dissolution of qualified blind trusts. Additionally, v2 adds new provisions for penalties for STOCK Act noncompliance and mandates electronic filing and public accessibility for financial disclosure forms, which were not present in v1.
Major additions
v2 introduces a new short title for the bill: the "Halting Ownership and Non-Ethical Stock Transactions (HONEST) Act."
This is a complete rebranding of the legislation, indicating a shift in its public presentation and potentially its political positioning, though it does not alter the operative policy.
v2 adds a new definition for "covered person" to include a Member of Congress, the President of the United States, and the Vice President of the United States.
This addition significantly broadens the scope of individuals subject to the financial transaction prohibitions, extending ethical oversight to the highest offices of the executive branch.
v2 explicitly includes "digital assets" within the definition of "covered investment" and provides a specific definition for "digital asset" as any digital representation of value recorded on a cryptographically secured distributed ledger or similar technology.
This addition clarifies that emerging forms of financial instruments, such as cryptocurrencies, are subject to the bill's prohibitions, ensuring the legislation remains relevant in a changing financial landscape.
v2 expands the definition of "covered investment" to explicitly include indirect, beneficial, or economic interests held through investment funds, holding companies, trusts, employee benefit plans, or deferred compensation plans (other than fixed cash payments).
This significantly broadens the types of assets that must be divested or cannot be acquired, closing potential loopholes that might allow covered persons to maintain interests in prohibited assets through complex financial structures.
v2 adds several new exclusions to the definition of "covered investment," including holdings within diversified mutual funds/ETFs, specific compensation for a spouse's primary occupation or corporate board service, government employee retirement plans, tax-free state/municipal bonds, interests in small business concerns (with a carve-out for family farms/ranches), grandfathered investment-grade corporate bonds, and Alaska Native Claims Settlement Act stock.
These additions provide specific relief and clarity for certain categories of assets, particularly those related to spousal employment, government retirement, and small businesses, potentially narrowing the practical impact for some individuals while broadening it for others.
v2 introduces a prohibition on establishing new qualified blind trusts (QBTs) after a certain date and mandates the divestment of covered investments within existing QBTs, followed by their dissolution. It also outlines specific communication rules between covered persons and trustees for divestment purposes and allows for extensions.
This fundamentally changes how high-value assets are managed for covered persons, aiming for greater transparency and direct divestment by eliminating the QBT as a compliant mechanism for holding covered investments.
v2 adds a new subsection that amends Section 1043(b) of the Internal Revenue Code of 1986 to allow covered persons to defer capital gains tax on divested covered investments if the proceeds are reinvested into diversified mutual funds or diversified exchange-traded funds.
This provides a significant financial incentive and mechanism to facilitate compliance with the mandatory divestment requirements, potentially easing the burden on covered persons.
v2 explicitly prohibits any covered person, spouse, or dependent child from acquiring any covered investment after the date of enactment, with a specific process for divesting inherited covered investments within 120 days (with possible extensions).
This closes a potential loophole for new acquisitions of prohibited assets and provides a structured approach for handling inherited investments, ensuring ongoing compliance.
v2 creates a new provision allowing for an exemption for family trusts under strict conditions, primarily if no covered person, spouse, or dependent child is a grantor, contributor, or has authority over the trustee, and the grantor is a family member. Requests and responses for such exemptions must be published.
This provides a pathway for certain family trusts to be exempt from divestment requirements, preventing undue hardship on passive, independently managed family assets, while maintaining transparency through publication.
v2 establishes a 90-day cooling-off period after an individual ceases to serve as a covered person, during which they, their spouse, or dependent children may not control covered investments, including purchasing new ones.
This extends the ethical restrictions beyond the term of service, aiming to prevent potential conflicts of interest or the appearance of impropriety immediately following departure from office.
v2 adds a new reporting requirement for "covered payments" (e.g., loans, contracts, grants) from the Federal Government to a covered person, spouse, dependent child, or any business owned and controlled by them. Reports must be submitted to the supervising ethics office within 30-45 days of notice or payment.
This introduces a new layer of transparency regarding financial interactions between covered persons (and their families/businesses) and the federal government, aiming to identify potential conflicts of interest.
v2 adds a new section to the STOCK Act (Public Law 112-105) imposing a $500 civil fine for failure to file a transaction report as required by the Act. This fine is to be assessed pursuant to regulations issued by the applicable supervising ethics office and deposited into the Treasury, effective March 31, 2027.
This introduces a specific, fixed financial penalty for non-compliance with existing STOCK Act reporting requirements, which was not present in v1, aiming to improve adherence to transparency rules.
v2 amends Section 8(b)(1) of the STOCK Act to mandate electronic filing of financial disclosure reports by Members of Congress and candidates. It requires these reports to be publicly accessible through searchable, sortable, and downloadable databases on official House and Senate websites, with API access and compliance with accessibility guidelines.
This significantly enhances transparency and public access to financial information for Members of Congress and candidates, making it easier for the public to monitor their financial activities. This was not addressed in v1.
v2 includes a standard severability clause, stating that if any provision of the Act or its amendments is held unconstitutional, the remainder of the Act shall not be affected.
This is a standard legal safeguard to ensure that the core intent of the legislation can be preserved even if specific parts are challenged successfully in court.
Deletions
v1's short title was the "Preventing Elected Leaders from Owning Securities and Investments (PELOSI) Act."
The deletion of this specific short title and its replacement with a new one indicates a complete rebranding of the legislation, likely for broader political appeal or to reflect the expanded scope of the bill. It does not alter the operative policy but changes the bill's identity.
v1 proposed a new Subchapter IV titled "Banning Insider Trading in Congress."
The deletion of this specific subchapter title and its replacement with a broader one ("Certain Assets of Members of Congress, the President, the Vice President, and Their Spouses and Dependent Children") reflects the expanded scope of the bill beyond just insider trading to a more comprehensive asset management and ethics framework, including the executive branch.
v1 provided a straightforward exception to the prohibition, allowing a Member of Congress or their spouse to sell any covered financial instrument within 180 days of the date of enactment (for existing Members) or 180 days after the first date of the initial term of service (for new Members).
This specific, universal 180-day divestment window has been removed. v2 replaces it with a more complex, staggered effective date and divestment process tied to new terms of service, specific provisions for illiquid investments, and mandatory dissolution of qualified blind trusts. The deletion signifies a shift towards a more nuanced, but potentially longer and more restrictive, divestment framework.
v1 required each Member of Congress to submit an annual written certification of compliance to the applicable supervising ethics committee, which would then be published publicly.
While the concept of compliance and publication is retained in v2, the specific, standalone section for annual certification has been deleted. Its functions are integrated into the broader reporting and enforcement mechanisms of v2's new Section 13163(f) and (h), which cover a wider range of disclosures and duties for ethics offices.
v1 outlined the authority of supervising ethics committees to implement and enforce the subchapter, including issuing rules and guidance, publishing certifications, and assessing civil fines. It detailed requirements for civil fines, including notice, hearing opportunities, a 30-day noncompliance period triggering a 10% value penalty every 30 days, publication of fines, and an appeal process.
This entire section has been deleted. While the core functions of ethics committees (enforcement, fines) are retained in v2, their specific implementation, penalty structure, and procedural details are entirely rewritten and integrated into v2's new Section 13163(g) and (h). The deletion reflects a complete overhaul of the enforcement framework, introducing new penalty calculations and broader duties for ethics offices.
v1 mandated that the Comptroller General of the United States conduct an audit of compliance by Members of Congress with the subchapter's requirements and submit a report to the supervising ethics committees not later than 2 years after the date of enactment.
This specific mandate for a GAO audit has been deleted. While general oversight may still occur, the explicit statutory requirement for a timely, independent audit of compliance is removed. This could reduce external accountability for compliance with the bill's provisions.
Modifications
The inclusion of indirect holdings significantly expands the types of assets that must be divested or cannot be acquired, increasing the scope of restrictions. Conversely, the new, more detailed exclusions provide specific relief for certain categories of assets, particularly those related to spousal employment, government retirement, and small businesses, potentially narrowing the practical impact for some individuals while broadening it for others by clarifying what is permissible.
Before
v1 defined "covered financial instrument" to include any investment in a security, security future, or commodity, and any comparable economic interest acquired through synthetic means. Exclusions included diversified mutual funds, diversified exchange-traded funds, United States Treasury bills, notes, or bonds, and compensation from the primary occupation of a spouse or dependent child.
After
v2 redefines this as "covered investment" to include an investment in a security, commodity, future, or digital asset, any comparable economic interest acquired through synthetic means, AND any such interest held directly or indirectly through an investment fund, holding company, trust, employee benefit plan, or deferred compensation plan (excluding fixed cash payments). Exclusions are expanded to include holdings within diversified funds, specific compensation for a spouse's primary occupation or corporate board service, spouse's trading in primary occupation (if not owned by covered person/spouse/child), government employee retirement plans, tax-free state/municipal bonds, interests in small business concerns (with a carve-out for family farms/ranches), grandfathered investment-grade corporate bonds, and Alaska Native Claims Settlement Act stock. A rule of construction for digital assets is also added.
This creates a more tailored, but potentially longer and more restrictive, divestment period for certain assets, especially illiquid ones. The mandatory dissolution of qualified blind trusts represents a significant shift from v1's approach, aiming for more direct control over asset management by the ethics offices. The expansion to the executive branch and dependent children imposes new, significant obligations on these groups.
Before
v1 prohibited Members of Congress and their spouses from holding, purchasing, or selling covered financial instruments during the term of service. An exception allowed sales within 180 days of enactment or commencing service.
After
v2 establishes a ban on purchasing covered investments effective on the date of enactment for covered persons, and a ban on selling 90 days after enactment (with exceptions). For spouses and dependent children, the ban on purchasing/selling applies on or after an applicable effective date. It introduces a mandatory divestiture framework for existing holdings, with different effective dates for officials sworn in before or after enactment, and specific extended timelines for "illiquid investments." It also mandates the dissolution of qualified blind trusts.
This change potentially increases the financial penalty for noncompliance, especially for covered persons with lower salaries but high-value non-divested assets, by ensuring a more substantial fine is levied, thereby strengthening the enforcement mechanism.
Before
v1's penalties for noncompliance included disgorgement of profit and civil fines assessed by the ethics committee. For continuing noncompliance, a civil penalty equal to 10% of the value of each non-divested covered financial instrument was imposed every 30 days.
After
v2 retains civil penalties for noncompliance. The amount of each civil penalty imposed for continuing noncompliance is now the *greater of* the monthly equivalent of the annual rate of pay payable to the covered person *or* 10 percent of the value of each covered investment that was not divested in violation.
Scope
Complete substitute — Changes are scattered throughout the bill, affecting its short title, core definitions, scope of covered individuals, prohibited assets, divestment mechanisms, enforcement, and adding entirely new sections on related ethics compliance and transparency. — v2 represents a significant change in policy direction, moving from a bill focused solely on Members of Congress to a comprehensive ethics reform measure encompassing the President, Vice President, and their families, with a more robust and detailed framework for asset divestment and transparency. — The changes interact extensively with existing provisions of Title 5, United States Code, particularly Chapter 131, by adding a new subchapter and making numerous conforming and technical amendments. The new sections on STOCK Act noncompliance and electronic filing also interact with and amend the STOCK Act.
Impact analysis
Members of Congress and their spouses
Primarily procedural change with some expansion of restrictions (indirect holdings) and some narrowing (new exclusions).
While still subject to prohibitions, the divestment process is now more complex, with specific rules for illiquid investments and mandatory dissolution of qualified blind trusts. The definition of prohibited assets ("covered investments") is broader, including indirect holdings, but also includes more specific exclusions.
The President, Vice President, and their spouses and dependent children
New restrictions and obligations.
These individuals are newly brought under the scope of the prohibition on holding, purchasing, or selling covered investments, and are subject to mandatory divestment requirements.
Individuals with qualified blind trusts
Loss of a specific asset management mechanism; new obligation to divest directly.
v2 prohibits the maintenance of qualified blind trusts after a certain period and mandates the divestment of covered investments within existing trusts, followed by their dissolution.
Individuals holding digital assets
New restrictions on a specific asset class.
Digital assets are explicitly included as "covered investments" and are therefore subject to the same prohibitions and divestment requirements.
Covered persons (and their families/businesses) receiving federal payments (loans, grants, contracts)
New reporting obligations.
A new reporting requirement is imposed, mandating disclosure of such payments to the supervising ethics office.
Reporting individuals under the STOCK Act
New financial penalty for non-compliance; increased transparency and public scrutiny.
A new $500 fine is imposed for failure to file transaction reports, and electronic filing with public, searchable access is mandated for financial disclosure forms.
Spouses of covered persons with primary occupations or corporate board service
Clarification and narrowing of restrictions for specific types of spousal income/investments.
Specific exclusions are added for compensation (including securities) from their primary occupation and for securities/dividends from corporate board service.
Covered persons with illiquid investments
Procedural relief and extended timeline for divestment.
Specific, extended timelines for divestment are provided, allowing divestment up to 90 days after contractually permitted to sell.