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.
Halting Ownership and Non-Ethical Stock Transactions (HONEST) Act
- Sponsor
- Sen. Hawley, Josh [R-MO]
- Committees
- Homeland Security and Governmental Affairs Committee (primary)
- Last action
- Dec 10, 2025
Bottom line
The HONEST Act aims to eliminate conflicts of interest and enhance public trust by banning individual stock trading and mandating divestiture for federal elected officials and their immediate families, while also improving financial disclosure transparency.
What it actually does
This bill prohibits Members of Congress, the President, Vice President, and their spouses and dependent children from purchasing or selling 'covered investments' (including individual stocks, commodities, futures, and digital assets) while in office. It mandates the divestiture of existing covered investments within specified timeframes, with exceptions for diversified mutual funds, U.S. Treasury bonds, and certain spousal income. The bill also amends the tax code to allow for tax-deferred divestment and strengthens transparency by requiring electronic, searchable public availability of financial disclosure forms.
Proponents argue
Supporters argue that this legislation is crucial for restoring public trust in government by removing both the appearance and reality of insider trading and conflicts of interest. They contend that elected officials should prioritize public service over personal financial gain, and that these measures will ensure greater integrity and accountability in federal office.
Opponents contend
Critics might argue that the bill is overly broad and imposes an undue burden on the financial privacy and autonomy of elected officials and their families. They may contend that existing ethics laws and disclosure requirements are sufficient, or that such stringent divestiture rules could deter qualified individuals from seeking public office due to the significant financial implications.
The bill is moderately complex due to its detailed definitions, exceptions, and cross-references, requiring careful reading to fully grasp its implications. Adequate time would be needed for an informed reader to evaluate its provisions thoroughly.
Section 1
Short Title
This section establishes the official short title for the bill, allowing it to be referred to concisely as the 'Halting Ownership and Non-Ethical Stock Transactions (HONEST) Act.' This title provides a clear and memorable name for the legislation, aiding public and legislative discourse.
Supporters argue
Supporters argue that a clear and descriptive short title helps the public and policymakers easily identify and discuss the legislation's purpose and intent.
Critics contend
No specific opposition is typically raised against the short title itself, though opponents of the bill's substance may criticize the title as misleading or politically charged.
Tradeoffs
None inherent in the title itself.
Section 2, new 5 U.S.C. 13161
Definitions of Key Terms
This section establishes the precise meanings of critical terms used throughout the new subchapter. It defines 'covered investment' to include securities, commodities, futures, and digital assets, while explicitly excluding diversified mutual funds, diversified exchange-traded funds, U.S. Treasury bonds, and certain forms of spousal compensation. It also defines 'covered person' as Members of Congress, the President, and Vice President, along with 'dependent child' and 'diversified' funds.
Section 2, new 5 U.S.C. 13162
Prohibition on Trading Covered Investments
This section bans Members of Congress, the President, Vice President, and their spouses and dependent children from buying any 'covered investment' starting from the bill's enactment date. It also prohibits selling such investments 90 days after enactment, with exceptions for divestiture directed by ethics offices. For spouses and dependent children, the ban on buying and selling takes effect on the applicable effective date, which is when the covered person commences a new term.
Section 2, new 5 U.S.C. 13163(a)
Mandatory Divestiture of Existing Covered Investments
Covered persons (and their families) already in office when the bill is enacted must divest all their covered investments by the start of their next term of service. Those sworn in after enactment must divest by the start of their initial term. Special provisions are made for illiquid investments, allowing divestiture within 90 days of being contractually permitted to sell. This ensures a transition period for existing holdings.
Section 2, new 5 U.S.C. 13163(a)(1)(C)
Restrictions and Dissolution of Qualified Blind Trusts
The bill prohibits covered persons and their families from maintaining qualified blind trusts 180 days after the applicable effective date. Existing qualified blind trusts holding covered investments must have their assets divested by the trustee, and the trust dissolved. Covered persons are permitted to communicate with trustees to direct divestment and choose permitted investments, and extensions may be granted for complex trusts.
Section 2, new 5 U.S.C. 13163(b)
Tax-Deferred Divestiture
This section amends Section 1043(b) of the Internal Revenue Code of 1986 to allow covered persons to defer capital gains taxes on the sale of covered investments if the proceeds are reinvested in 'permitted property' (diversified mutual funds or diversified exchange-traded funds) within 60 days. This aims to mitigate the financial burden of forced divestiture.
Section 2, new 5 U.S.C. 13163(c)
Ban on Acquiring New Covered Investments
Effective from the date of enactment, no covered person, spouse, or dependent child may acquire any new covered investment. An exception is made for inherited covered investments, which must be divested within 120 days (with possible extensions), ensuring that new, prohibited assets do not enter their portfolios.
Section 2, new 5 U.S.C. 13163(f)
Public Reporting and Transparency
Supervising ethics offices must publish all divestiture notices, dissolution notices for blind trusts, and details of any extensions or civil penalties. Additionally, covered persons must report any 'covered payment' (federal government payments, loans, contracts, grants) received by themselves, their spouse, or dependent child, or businesses they own, within 30-45 days of receipt. This enhances public oversight.
Section 2, new 5 U.S.C. 13163(g)
Enforcement and Civil Penalties
Supervising ethics offices must issue written notices to covered persons who fail to divest or acquire prohibited investments. If non-compliance continues for 30 days after notice, a civil penalty is imposed every 30 days. The penalty is the greater of the covered person's monthly pay or 10% of the value of the non-divested covered investment, incentivizing compliance.
Section 4
Electronic Filing and Enhanced Online Public Access to Financial Disclosures
This section amends the STOCK Act to require that financial disclosure reports and transaction reports filed by Members of Congress and candidates be made publicly available through searchable, sortable, and downloadable databases on the official websites of the House and Senate. This includes access via an API and compliance with accessibility standards, significantly enhancing transparency and public oversight.
This subsection lists 12 specific types of financial instruments and situations that are explicitly *excluded* from the definition of 'covered investment,' meaning they are not subject to the trading or divestiture bans. These exclusions include diversified mutual funds, diversified exchange-traded funds, U.S. Treasury bills/notes/bonds, compensation from a spouse's primary occupation (and related securities), corporate board service compensation for spouses, trading by a spouse in their primary occupation (if not owned by covered person/family), government employee retirement plans, tax-free municipal bonds, interests in small business concerns (with ethics office determination), existing investment-grade corporate bonds, and certain Alaska Native Claims Settlement Act stock.
Section 2, new 5 U.S.C. 13161(2)(B)
Why it matters:This level of detail is standard legislative practice for precisely defining the scope of a prohibition and its exceptions. However, the length and complexity of the list can make it function as fine print.
Case for: Proponents argue these exclusions are necessary to avoid overly burdensome restrictions, protect legitimate income sources for spouses, and allow for common, low-risk investment vehicles like diversified funds, making the overall ban more practical and politically viable.
Case against: Critics might argue that some exclusions, particularly those related to a spouse's primary occupation or small business concerns, could still create avenues for indirect influence or perceived conflicts if not rigorously overseen by ethics offices, potentially undermining the bill's intent.
Estimated impact: Significantly narrows the scope of the ban, allowing covered persons and their families to maintain substantial portions of their wealth in certain types of investments, thereby reducing the financial impact of the divestiture requirement.
This 'rule of construction' clarifies that nothing in the definition of 'covered investment' should be interpreted to imply that particular digital assets are *not* already classified as securities, commodities, or other types of covered investments under existing law.
Section 2, new 5 U.S.C. 13161(2)(C)
Why it matters:This is a common legislative technique used to avoid inadvertently prejudging complex legal classifications, especially in rapidly evolving areas like digital assets, leaving such determinations to existing regulatory frameworks or future legislation.
Case for: Proponents argue this provision maintains regulatory flexibility and avoids creating unintended legal precedents regarding the classification of digital assets under existing securities or commodities law, ensuring the bill focuses on conduct rather than asset classification.
Case against: Critics might argue that by explicitly avoiding a definitive stance on digital asset classification, the bill leaves an area of ambiguity that could lead to future legal challenges or inconsistent application regarding these assets, potentially creating loopholes.
Estimated impact: Prevents the bill from being interpreted as a definitive statement on the legal nature of digital assets, leaving that to existing regulatory frameworks or future legislation, thus maintaining the status quo on classification debates.
This subsection establishes the 'effective date' for the divestiture requirements for covered persons and their families. For those sworn in before the bill's enactment, the requirements take effect when they commence a *new term of service* after enactment. For those sworn in after enactment, it takes effect when they commence their *initial term of service*.
Section 2, new 5 U.S.C. 13163(j)
Why it matters:This is a crucial implementation detail, often placed at the end of a section detailing the requirements. It provides a transition period, which is common in legislation to ease compliance and gain broader support.
Case for: Proponents argue this phased approach provides a reasonable transition period for current officials, allowing them to complete their current term before being subject to the full divestiture mandate, while immediately applying it to new entrants. This balances fairness for incumbents with the goal of future ethical standards.
Case against: Critics might argue that delaying divestiture for current officials prolongs the period of potential conflicts of interest, and that an immediate divestiture for all covered persons would be more impactful and consistent with the bill's stated goals of eliminating conflicts.
Estimated impact: Delays the full effect of divestiture for many incumbent officials, potentially for several years depending on election cycles, while immediately impacting new officeholders.