Dismantling Investments in Violation of Ethical Standards through Trusts Act

This bill aims to prevent conflicts of interest by prohibiting senior federal employees, their spouses, and dependent children from holding, purchasing, or selling certain financial instruments during the employee's term of service. The legislation defines "covered financial instruments" broadly to include investments in securities, security futures, and commodities, as well as comparable economic interests acquired through synthetic means like derivatives. However, it explicitly excludes diversified mutual funds, diversified exchange-traded funds, United States Treasury bills, notes, or bonds, and compensation from a spouse or dependent child's primary occupation. Exceptions to this prohibition include a 180-day period for divestiture after the bill's enactment or commencement of service, allowing time for compliance. Holdings within a qualified blind trust are also exempt, providing a mechanism for managing assets without direct control. Additionally, certain instruments exempted under existing conflict of interest regulations are excluded from the ban. Violations of these prohibitions carry significant penalties, including the disgorgement of any profits from illicit transactions to the Treasury and the inability to deduct associated losses from income tax. Senior federal employees may also face civil fines assessed by their supervising ethics office , which can be up to $1,000 or 10% of the instrument's greatest value. Each employee must annually certify compliance, and the ethics office will publish these certifications and details of any assessed fines publicly, with a Government Accountability Office audit mandated within two years of enactment to ensure effectiveness.