Tag Archives: insider trading by Congress

An Odd Couple Introduces Common Sense

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On Tuesday, Just the News reported that Florida Republican Representative Matt Gaetz and New York Democratic Representative Alexandria Ocasio-Cortez have introduced a bill banning lawmakers, their spouses, or dependents from trading stocks. If that bill is ever passed, it will seriously diminish the incomes of the people who serve in Congress.

The article reports:

House Problem Solvers Caucus co-chair Rep. Brian Fitzpatrick, R-Penn., and Democratic Illinois Rep. Raja Krishnamoorthi joined the pair in introducing the Bipartisan Restoring Faith in Government Act on Tuesday.

The bill further grants lawmakers a 90-day window during which they must divest themselves of their existing stocks. Moreover, should the spouse of a lawmaker receive “any financial instrument” as compensation for their main employment, they will have 90 days to sell it from the date they are contractually permitted to do so.

Covered individuals may still invest in “widely held investment funds” or government bonds.

The article concludes:

“As long as concerns about insider trading hang over the legislative process, Congress will never regain the trust of the American people. Our responsibility in Congress is to serve the people, not hedge bets on the stock market,” Gaetz warned.

AOC, meanwhile, echoed his remarks, saying “[t]he ability to individually trade stock erodes the public’s trust in government.”

“Members of Congress must be focused on their constituents, not their stock portfolios,” Krishnamoorthi added.

That is bipartisan legislation that most Americans can support. Unfortunately, I rather doubt it will become law.

About Those Stock Trades

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Yesterday I reported on the brilliant stock market trading of House Majority Leader Nancy Pelosi and her husband (article here). Today there is a report out about a brilliant Senator whose superior intellect allowed him to avoid major losses in the stock market.

The Daily Caller reports:

Sen. Richard Burr’s “well-timed stock sales” prior to the economic downturn in late February 2020 saved him over $87,000, according to an FBI search warrant affidavit unsealed Monday.

The unsealed warrant is in connection to a prior Justice Department (DOJ) investigation into alleged insider trading by the North Carolina Republican during the early stages of the COVID-19 pandemic — which was closed in January 2021 after the DOJ decided not to pursue charges. The senator profited over $144,000 on his stock sales in February 2020, the affidavit says.

The article concludes:

Burr also called his brother-in-law after he sold the stocks, the Securities and Exchange Commission (SEC) alleged in October 2021, according to ProPublica. His brother-in-law sold up to $280,000 worth of stock that same day, the outlet previously reported.

The SEC was reportedly investigating the incident for possible insider trading and it is unclear if that probe is ongoing.

Burr’s office did not respond to a request for comment nor did the FBI or the SEC.

Oh to trade in the stock market like Congress trades.

A Law Without Enforcement Isn’t Really A Law

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On Wednesday, Business Insider posted an article which might partially explain how people who enter Congress as middle-class Americans seem to become millionaires very quickly.

The article reports:

Congress and top Capitol Hill staff have violated the STOCK Act hundreds of times. But the consequences are minimal, inconsistent, and not recorded publicly.

So we have no idea who is doing insider trading.

The article continues:

Congress has a spotty and inconsistent method for collecting fines from members and top staffers who break a federal law designed to stop insider trading and conflicts of interest, an Insider investigation found. 

Insider’s investigation of financial disclosures found that 49 members of Congress and at least 182 of the highest-paid Capitol Hill staffers were late in filing their stock trades during 2020 and 2021.

Lawmakers and senior congressional staffers who blow past the deadlines established by the 2012 Stop Trading on Congressional Knowledge Act are supposed to pay a late fee of $200 the first time. Increasingly higher fines follow if they continue to be late — potentially costing tens of thousands of dollars in extreme cases.

But accountability and transparency are decidedly lacking. 

No public records exist indicating whether these officials ever paid the fines. Congressional ethics staff wouldn’t confirm the existence of nonpublic ledgers tracking how many officials paid fines for violating the STOCK Act. And 19 lawmakers wouldn’t answer questions from Insider about whether they’d paid a penalty. Ten other lawmakers said they’d paid their fines, but they declined to provide proof, such as a receipt or canceled check. 

The article concludes:

“If you are a member of Congress, you have this duty to not take advantage of information you learned because of your job,” said Gellasch (Tyler Gellasch, a fellow at the Global Financial Markets Center at Duke University School of Law), who previously served as congressional staffer to former Democratic Sen. Carl Levin, of Michigan, and helped draft the STOCK Act.

Virginia Canter, the chief ethics counsel at Citizens for Responsibility and Ethics in Washington, said Congress’ laissez-faire approach to the STOCK Act “sends the message that they are held to a lesser standard than other government employees, and that they are above the law.”

Canter called lawmakers’ stock-trading habits “an accident waiting to happen.” Their difficulties complying with the transparency and accountability provisions in the STOCK Act underscored why members shouldn’t trade individual stocks, she added.

Spanberger agreed: “We have regulations, we have rules, we have standards for a reason. And not enforcing them or abiding by them creates fertile ground for people to behave improperly.”

Much Needed Legislation

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Being elected to Congress is a wonderful thing–the prestige, the recognition, joining a very select group of people, and seemingly the opportunity to increase your net worth significantly.

The following Tweet by ZeroHedge was tweeted on September 28, 2020:

Wow! An amazing increase in personal wealth that didn’t actually involve inventing or marketing a product! Unfortunately this is not an isolated example.

The article includes a few more examples from Business Insider:

Burr (North Carolina Senator Richard Burr), who endured a months-long federal investigation into his personal stock trades, last week reported making several recent stock sales along with his wife, Brooke Burr.

The Burrs sold up to $165,000 worth of stock in Enterprise Products Partners, a natural-gas and crude-oil pipeline company, between April 28 and April 30. The company’s stock price has remained effectively level since then.

Brooke Burr also reported selling up to $100,000 in MetLife Inc. floating-rate noncumulative preferred stock and up to $100,000 in US Bancorp depository preferred shares.

Burr, who wasn’t charged, made a flurry of stock sales on February 13, 2020, six days after cowriting an opinion article on FoxNews.com that sought to ease public concern over the threat COVID-19 posed to the US.

“Thankfully, the United States today is better prepared than ever before to face emerging public health threats, like the coronavirus, in large part due to the work of the Senate Health Committee, Congress, and the Trump Administration,” Burr wrote along with then-Sen. Lamar Alexander, a Tennessee Republican.

But on February 27 of last year, Burr — then chairman of the Senate Intelligence Committee — told a more dire story to a small, private luncheon gathering at Washington’s tony Capitol Hill Club.

“There’s one thing that I can tell you about this: It is much more aggressive in its transmission than anything that we have seen in recent history,” Burr said, according to a secret recording obtained by NPR’s Tim Mak. “It is probably more akin to the 1918 pandemic.”

The Justice Department’s investigation of Burr’s February 2020 stock trades, together valued at more than $1.7 million, centered on whether the senator made his trades based on insider information obtained during senators-only briefings about the COVID-19 threat.

Burr says he is not planning to run for reelection in 2022.

Business Insider also mentions Jim Inhofe:

An aviation enthusiast who announced his 2020 reelection bid by piloting a propeller plane upside down, Sen. Jim Inhofe, a Republican of Oklahoma, has regularly made news over the years for close-call incidents while flying.

More recently, Inhofe sought to remedy another aircraft situation — this time on paper.

In a May 17 letter to the US Senate Secretary Julie Adams, Inhofe acknowledged understating the value of the assets — most notably, airplanes — held by The Padre Company LLC, a limited-liability company that the senator controls.

As of 2019, Inhofe’s LLC held three aircraft together valued at up to $1 million: a 1979 Grumman Tiger, a 1999 RV-8, and a 1979 Cessna 340. It also included real estate.

Inhofe wrote that his letter provided a “total reconciliation of the life of my assets” within The Padre Company LLC, which formed in 1999.

In short, Inhofe had not been previously factoring in the value of the real-estate property as part of his public disclosure of the LLC. Now he is, which is why the reported value of the LLC has increased.

“Ahead of filing his annual disclosures each year, Senator Inhofe discusses it with the Ethics Committee to maximize transparency and ensure he is adhering to the spirit of the law, not just the letter of it,” the spokesperson Leacy Burke told Insider. “Previously, it had been understood that these were considered personal properties and exempt, unreportable assets. This year, in the interest of greater transparency, he was encouraged to file the amendment and include them, as you can see he did.”

It pays to be in Congress, and an attempt to end the insider trading that seems to be rampant there is coming from a rather unlikely source.

Zero Hedge reports:

Senator Elizabeth Warren (D-MA) wants to end what is effectively legalized insider trading by members of Congress by barring them from trading individual stocks ever again.

Warren first attempted to push through similar legislation with the Anti-Corruption and Public Integrity Act she introduced in 2018 and then again in 2020. Both bills unsurprisingly died in the Senate Finance Committee, which Warren sits on.

The renewed push comes as several members of Congress have come under recent scrutiny for profitable stock trades in recent months, according to Business Insider. The include Sens. Richard Burr (R-NC), Tom Malinowski (D-NJ) and former Republican Sens. David Perdue and Kelly Loeffler of Georgia.

Even a blind squirrel finds an acorn sometimes.

 

Some Details On Congressional Insider Trading

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U.S. Senator John Kerry of Massachusetts

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Big Government posted an article today showing documents it has obtained detailing some of John Kerry’s stock trades during the debates before the passage of Obamacare. Oddly enough, the trades took place in pharmaceutical stocks and were executed in such a manner to insure significant profits. Was he just a really good investor?

The article reports:

Sen. John Kerry’s position on the powerful Senate Finance Committee’s Health Subcommittee gives him direct access to critical information regarding health care policy. In July 2009, pharmaceutical industry representatives met with key members of Congress to flesh out the Obamacare bill. Then, in November 2009, with the bill’s passage was looking more likely, the Kerrys’ portfolios reflect a drug stock buying spree.

The article also cites some of the Kerry family’s trading during the negotiations on the prescription drug plan:

The Kerrys’ investment funds bulked up on:

  1. More than $500,000 of Johnson & Johnson
  2. As much as $1 million of Pfizer
  3. At least $200,000 in Oxford Health Plans
  4. Between $500,000 and $1 million in United Health Group
  5. At least $100,000 of Cardinal Health
  6. At least $240,000 of Merck

The result: after the bill was signed into law in 2004, some of the Kerrys’ investments were sold, which netted between $100,000 and $1 million from Oxford Health Plans, plus tens of thousands from Pfizer, Johnson & Johnson, and Cardinal Health.

Please follow the link to the article in Big Government to read the entire article and see the documentation of the trades.

This sort of behavior on the part of our elected officials is simply unacceptable.

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