How HR 4036 changes current law

Compared against current U.S. Code AI-generated reading aid — verify against the official bill.

The bill adds a prohibition on short selling certain financial investments by Members of Congress and their spouses and dependents.

• 5 U.S.C. Chapter 131

  SUBCHAPTER IV--PROHIBITION ON CONGRESSIONAL SHORT SELLING

  Establishes a new subchapter regarding short selling prohibitions for Congress members.

• 5 U.S.C. § 13151

  Definitions In this subchapter: (1) Covered financial instrument.--The term `covered financial instrument' means-- (A) any investment in-- (i) a security (as defined in section 3(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a))); (ii) a security future (as defined in section 3(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a))); or (iii) a commodity (as defined in section 1a of the Commodity Exchange Act (7 U.S.C. 1a)); and (B) any economic interest comparable to an interest described in subclause (I) that is acquired through synthetic means, such as the use of a derivative, including an option, warrant, or other similar means.

  Defines 'covered financial instrument' relevant to the short sale prohibition.

• 5 U.S.C. § 13151

  (2) Covered individual.--The term `covered individual' means any of the following: (A) A Member of Congress. (B) The spouse of a Member of Congress. (C) The dependent of a Member of Congress.

  Defines who qualifies as a 'covered individual' under the prohibition.

• 5 U.S.C. § 13152

  Limitation on short sale (a) In General.--No covered individual may engage in a short sale of any covered financial instrument issued by any business entity that is listed on a national stock exchange.

  Prohibits short sales by covered individuals on publicly listed financial instruments.

• 5 U.S.C. § 13152

  (b) Income Tax.--A loss from a short sale involving a covered financial instrument that is conducted in violation of this section may not be deducted from the amount of income tax owed by the covered individual.

  Clarifies that losses from prohibited short sales cannot be deducted for tax purposes.

• 5 U.S.C. § 13153

  Enforcement (a) Referral.--The supervising ethics office shall refer to the Attorney General the name of any covered individual who such office has reasonable cause to believe has willfully failed to comply with the requirements of section 13152.

  Establishes enforcement mechanisms for violations of the short sale prohibition.

• 5 U.S.C. § 13153

  (b) Penalty.-- (1) In general.--The Attorney General may bring a civil action in any appropriate United States district court against any covered individual who knowingly and willfully fails to comply with section 13152. The court in which such action is brought may assess against such individual a civil penalty in any amount, not to exceed $50,000.

  Sets penalties for knowingly violating the short sale prohibition.

• 5 U.S.C. § 13153

  (2) Limitation.--A covered individual may not pay any penalty resulting from a civil action under paragraph (1) using-- (A) funds from a Members' Representational Allowance or Senators' Official Personnel and Office Expense Account (as the case may be); or (B) funds of any political committee under the Federal Election Campaign Act of 1971 (52 U.S.C. 30101 et seq.).

  Prevents the use of certain funds to pay penalties for violations.