Senate File 2247 - IntroducedA Bill ForAn Act 1relating to the trading and holding of certain
2securities by members of the general assembly and their
3spouses and including applicability provisions.
4BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1   Section 1.  NEW SECTION.  68B.41  Definitions.
   2For purposes of this subchapter, unless the context requires
3otherwise:
   41.  “Blind trust” means a trust established by or for the
5benefit of a member of the general assembly or the member’s
6spouse for divestiture of all control and knowledge of assets.
7A trust qualifies as a blind trust if the member of the
8general assembly and the member’s spouse has no knowledge of
9the holdings and sources of income of the trust, the trustee
10is independent of and is not associated with, employed by,
11or related to the member of the general assembly or the
12member’s spouse, and the trustee has sole discretion as to the
13management of the trust assets.
   142.  a.  “Covered financial instrument” means any of the
15following:
   16(1)  An investment in a security or security future as each
17is defined in section 3(a) of the federal Securities Exchange
18Act of 1934.
   19(2)  A commodity as defined in section 1a of the federal
20Commodity Exchange Act.
   21(3)  Any economic interest comparable to an instrument
22described in subparagraph (1) or (2) acquired through synthetic
23means, such as the use of a derivate, including an option,
24warrant, or other similar means.
   25b.  “Covered financial instrument” does not mean any of the
26following:
   27(1)  A diversified mutual fund.
   28(2)  A diversified exchange-traded fund.
   29(3)  A United States treasury bill, note, or bond.
   303.  “Ethics committee” means the senate ethics committee or
31house ethics committee, as applicable.
   324.  “Newly elected member” means a member of the general
33assembly who was not a member of the immediately preceding
34general assembly.
35   Sec. 2.  NEW SECTION.  68B.42  Holding or trading covered
-1-1financial instruments — prohibition.
   21.  Except as provided in subsection 2, a member of the
3general assembly or the member’s spouse shall not, during a
4regular or extraordinary session of the general assembly, hold,
5purchase, or sell a covered financial instrument.
   62.  Subsection 1 shall not apply to any of the following:
   7a.  A newly elected member of the general assembly or the
8member’s spouse until seven days after the member has taken the
9oath of office.
   10b.  A covered financial instrument held in a blind trust or
11purchased or sold by the trustee of the blind trust.
12   Sec. 3.  NEW SECTION.  68B.43  Penalties.
   131.  A member of the general assembly or the member’s spouse
14shall disgorge to the department of revenue any profit from a
15transaction or holding involving a covered financial instrument
16that violates this subchapter for deposit in the general fund.
   172.  A loss from a transaction or holding involving a covered
18financial instrument that violates this subchapter shall not
19be deducted from the amount of income tax the member of the
20general assembly or the member’s spouse owes to this state.
   213.  If a member of the general assembly or the member’s
22spouse holds or conducts a transaction that violates this
23subchapter, the ethics committee may hold a hearing and the
24member may be subject to additional punishment under the
25applicable code of ethics.
26   Sec. 4.  NEW SECTION.  68B.44  Certification of compliance —
27audits.
   281.  Annually, not later than seven days after the convening
29of the regular session, each member of the general assembly
30shall file with the chief clerk of the house or the secretary
31of the senate, as applicable, a written certification that the
32member and the member’s spouse are in compliance with this
33subchapter. The filed certifications shall be published on the
34general assembly’s internet site in a searchable database.
   352.  The board shall audit each member of the general assembly
-2-1for compliance with this subchapter every two years. The board
2shall submit to the ethics committee the results of the audits.
3The board may adopt rules to administer this subsection.
4   Sec. 5.  Section 422.7, Code 2022, is amended by adding the
5following new subsection:
6   NEW SUBSECTION.  51.  Add, to the extent excluded, the
7ordinary or capital loss realized by the taxpayer in a
8transaction that violates section 68B.43, subsection 2.
9   Sec. 6.  CODE EDITOR DIRECTIVE.  The Code editor shall
10designate sections 68B.41 through 68B.44, as enacted in this
11Act, as a new subchapter in chapter 68B.
12   Sec. 7.  APPLICABILITY.  This Act applies beginning with the
13first regular session of the Ninetieth General Assembly.
14EXPLANATION
15The inclusion of this explanation does not constitute agreement with
16the explanation’s substance by the members of the general assembly.
   17This bill relates to the trading and holding of certain
18securities by members of the general assembly and their
19spouses.
   20The bill prohibits a member of the general assembly or the
21member’s spouse from trading or holding certain securities
22while the general assembly is in session. The bill does
23not prohibit the trading or holding of diversified mutual
24funds, diversified exchange-traded funds, or United States
25treasury bills, notes, or bonds. In addition, the bill does
26not prohibit the trading or holding of securities that the
27member or member’s spouse has placed into a blind trust. Under
28the bill, a blind trust is a trust established by or for the
29benefit of the member or the member’s spouse for divestiture
30of all control and knowledge of assets. To qualify, the
31member and the member’s spouse cannot have any knowledge of
32the holdings and sources of income of the trust, the trustee
33must be independent of and not associated with, employed by, or
34related to the member or the member’s spouse, and the trustee
35must have sole discretion as to the management of the trust
-3-1assets.
   2If a member or a member’s spouse violates the provisions
3of the bill, any gain from a transaction is disgorged to the
4department of revenue for transfer to the general fund. If
5the transaction results in a loss, the member and the member’s
6spouse cannot deduct the loss from their state income taxes.
7The senate or house ethics committee, as applicable, may impose
8additional punishment under the applicable code of ethics for
9violations of the bill.
   10The bill requires members of the general assembly to
11annually file with the chief clerk of the house or the
12secretary of the senate, as applicable, a written certification
13that the member and the member’s spouse are in compliance with
14the bill. The filed certifications must be published on the
15general assembly’s internet site in a searchable database.
   16The bill requires the Iowa ethics and campaign disclosure
17board to audit each member of the general assembly for
18compliance with the bill every two years and to submit to
19the ethics committee the results of the audits. The bill
20authorizes the board to adopt rules to administer this
21requirement.
   22The bill applies beginning with the first regular session of
23the 90th General Assembly.
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