Can Hank Paulson avoid tax on $600MM unrealized capital gain upon becoming a government employee?

A tax expert told me the following:
"Hank Paulson, the incoming Secretary of the Treasury, with a personal fortune of USD 700,000,000 has the right to benefit from a brand new tax exemption available only to those in government which is the right to sell all of his USD 700,000,000 of holdings and swap them into index funds or treasury bonds, and pay zero, that's right, zero tax on his USD 600,000,000 of profits.

I take it the gist of it is:
- New rule exempts government employees from tax on any capital gains realized upon the sale of treasuries.
- Paulson has $700MM of Goldman stock, with $100MM basis.
- Paulson could trade his Goldman stock for Treasury securities, and that exchange of securities would be a non-taxable event, so the basis of the treasuries would be $100MM.
- Paulson could then sell the Treasuries for $700MM, but as a federal employee be exempted from tax on the $600MM gain.

Is this analysis correct?

I read a news article on the subject. Since you piqued my interest, I looked it up.

Section 1043 of the Internal Revenue Code was enacted in 1989. It allows executive branch employees to defer - not avoid - tax on gains realized when they are forced to sell their holdings due to conflict of interest rules. The proceeds must be reinvested in Treasury securities or approved mutual funds.

The basis of the reinvestment property is adjusted so that the deferred gain will be taxed when that property is disposed of.

I am not aware of any rule that would allow that gain to be untaxed because he is a federal employee.

I try to track new federal tax legislation and I have not heard of a law with any such provision.