Prohibition on covered transactions involving prediction market contracts

(a) Definitions In this section: (1) Covered individual The term covered individual means— (A) a member of the Armed Forces; (B) a civilian employee of the Department of Defense; or (C) an employee of a Department of Defense contractor, subcontractor, grantee, or subgrantee or personal services contractor. (2) Designated agency ethics official The term designated agency ethics official means the designated agency ethics official, as that term is defined in section 13101 of title 5, United States Code, for the Department of Defense. (3) Material nonpublic information The term material nonpublic information means information— (A) that a reasonable investor would consider important in making a decision relating to a prediction market contract; and (B) that is not publicly available. (4) Prediction market contract The term prediction market contract means any financial instrument, contract, or derivative— (A) listed on or offered by a platform, regardless of whether the platform is domiciled in the United States; and (B) tied to the occurrence or non-occurrence of an event, including event contracts, as described in section 5c(c)(5)(C)(i) of the Commodity Exchange Act (7 U.S.C. 7a-2(c)(5)(C)(i)). (b) Prohibition No covered individual may use material nonpublic information derived from the position of the covered individual as a member of the Armed Forces, civilian employee of the Department of Defense, or employee of a Department of Defense contractor, subcontractor, grantee, or subgrantee or personal services contractor or gained from the performance of the official responsibilities of the covered individual as a means for making a profit through a covered transaction. (c) Reports Not later than 30 days after receiving notification of any covered transaction the value of which is more than $250 and to which the covered individual is a party, the covered individual shall submit to the designated agency ethics official a report describing the covered transaction, which shall include— (1) the value of the prediction market contract, including the purchase price and number of prediction market contracts purchased; (2) the date and time of the covered transaction; (3) the name of the prediction market contract and the position taken on the prediction market contract; (4) the prediction market contract trading platform used to complete the covered transaction; and (5) the profit or loss of the covered transaction after the prediction market contract closes, or the covered individual exits the position, provided that if the prediction market contract is not closed on the date on which the report under this section is submitted, an additional report shall be submitted not later than 30 days after the date on which the prediction market contract closes or the covered individual exits the position. (d) Policy (1) Penalties Not later than 45 days after the date of enactment of this Act, the Secretary of Defense shall establish appropriate penalties for violating the prohibition under subsection (b). (2) Reporting A violation of the prohibition under subsection (b) shall be reported by the designated agency ethics official to the Secretary of Defense.