Sec. 3. Ban conflicted trades
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/bill/117/s/3076/is/section-3A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
The Federal Reserve Act (12 U.S.C. et seq.) is amended by inserting after section 25C ( 12 U.S.C. 633 ) the following: In this section— the term commodity has the meaning given the term in section 1a of the Commodity Exchange Act ( 7 U.S.C. 1a ); the term covered investment — means investment in a security, a commodity, virtual currency, or a future, or any comparable financial interest acquired through synthetic means such as the use of a derivative; and does not include— a diversified mutual fund or investment trust subject to an exemption under section 208(b)(2) of title 18, United States Code, and section 2640.201 of title 5, Code of Federal Regulations; or a United States Treasury bill, note, or bond; the term covered person means— a member of the Board of Governors of the Federal Reserve System; and a president or vice president of a Federal Reserve bank; the term future means a financial contract obligating the buyer to purchase an asset or the seller to sell an asset, such as a physical commodity or a financial instrument, at a predetermined future date and price; the term security has the meaning given the term in section 3(a) of the Securities Exchange Act of 1934 ( 15 U.S.C. 78c(a) ); and the term virtual currency means any cryptocurrency, such as coins or tokens received in connection with initial coin offerings or issued or distributed using distributed ledger or blockchain technology.
Except as provided in subsections
(c)and (d), no covered person may— purchase or sell any covered investment; or enter into a transaction that creates a net short position in any security. A covered person may have control over or knowledge of the management of any covered investment held by the covered person as of the day before the date on which the covered person took office. A covered person may not buy or sell any investment described in subparagraph
(A)except in the case of— placing the investment in a qualified blind trust described in subsection (d); or divesting themselves of any investment under paragraph (2). A covered person may sell a covered investment during the 6-month period beginning on— the date on which the covered person takes office or begins employment, as applicable; the date of enactment of this section; or the date on which the covered person receives a covered investment through gift or inheritance. Any transaction described in this subsection shall be approved in accordance with the rules issued under subsection (f). On a case-by-case basis, the designated agency ethics official of the Board of Governors may authorize a covered person to place their securities holdings in a qualified blind trust approved by the Board under section 102(f) of the Ethics in Government Act of 1978 (5 U.S.C. App.). A blind trust permitted under this subsection shall meet the criteria in section 102(f)(4)(B) of the Ethics in Government Act of 1978 (5 U.S.C. App.), unless an alternative arrangement is approved by the Board. The provisions of this section shall be administered by the Board. Whoever knowingly fails to comply with this section shall be subject to a civil penalty of not less than 10 percent of the value of the covered investment that was purchased or sold or the security in which a net short position was created in violation of this section, as applicable. Not later than 90 days after the date of enactment of this section, the Board shall issue rules that require covered persons and senior staff to— provide 45 days advance notice and prior approval for any investment transactions; and hold investments for a minimum of 1 year from the date of the transaction. .
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