Legislators trading individual stocks is an ethical disaster

[Elderberry]

Houston Chronicle by Michael Taylor 10/20/2021

Taylor: Legislators trading individual stocks is an ethical disaster

There is a law, first passed in 2012, called the Stop Trading on Congressional Knowledge Act of 2012 (STOCK Act). It requires officials to disclose any stock transactions within 45 days of trading. Dozens of members of Congress this year ignored or violated this law with late disclosures. Sometimes, elected officials make no disclosures at all. The penalties under the STOCK Act for these types of violations are tiny — like in the hundreds of dollars.

In late September, the ethics watchdog group Campaign Legal Center cited seven members of Congress for massive failures to disclose their stock trades.

This is a bipartisan problem. The Campaign Legal Center report named and shamed House representatives Cindy Axne (D-Iowa), Warren Davidson (R-OH), Lance Gooden (R-TX), Bobby Scott (D-VA), Thomas Suozzi (D-NY), Roger Williams (R-TX) and Michael San Nicholas (D-Guam)

These seven engaged in hundreds of thousands of dollars in stock trading without reporting them. Five of the seven sit on the House Committee on Financial Services, which seems like a particularly egregious violation of trust.

In June, Business Insider reported that Rep. Pat Fallon (R-TX) failed to disclose 93 stock trades worth between $7.8 and $17.5 million between January and April 2021. Fallon is a member of the House Armed Services Committee and was trading Boeing stock, which is obviously not OK.

Do we know for sure whether House and Senate members are profitably trading stocks using inside knowledge or their regulatory power? Not exactly. Could these just be cases of overlooking details and failure to disclose, as the elected officials generally claim? Of course.

But that’s missing the point. The point is that even the appearance of elected officials taking advantage of the system undermines trust in government and in markets.

More: https://www.houstonchronicle.com/sa-inc/article/Taylor-Legislators-trading-individual-stocks-is-16546407.php

[Smokin Joe]

It is a conflict of interest, at some point, especially when legislation effectively chooses winners and losers.

It is also how people get filthy rich in mere low six figure jobs.

[mountaineer]

Pa. Rep. Mike Kelly Faces Ethics Scrutiny Over Stock Purchase
October 23, 2021 at 1:08 am

WASHINGTON (AP) — A congressional ethics watchdog has concluded there is “substantial reason to believe” that the wife of Pennsylvania Rep. Mike Kelly used nonpublic information gained through her husband’s position in Congress to purchase stock last year.

That could violate federal law and House rules.  ...

Rest of story at KDKA

Paging Nancy Pelosi's stockbroker ...

See also:

Insider trading and Congress: How lawmakers get rich from the stock market
Published Thu, Oct 22 20209:01 AM EDT Updated Thu, Oct 22 20209:57 AM EDT
Brian Clark and Tala Hadavi

Four U.S. senators were accused in March of using insider information about the coronavirus pandemic to profit in the stock market.

A couple of months later, the investigations into Sens. Kelly Loeffler, R-Ga., Dianna Feinstein, D-Calif., and James Inhofe, R-Okla., were closed. Sen. Richard Burr, R-N.C., stepped down as chairman of the Senate Intelligence Committee amid the allegations.

Until the 2008 financial crisis, lawmakers were under few restrictions, and the public wasn’t able to find out much about lawmakers’ investments. In 2012, the Stop Trading on Congressional Knowledge Act was passed to clean up Washington. But recent events have yet again thrust the issue to the forefront. ...

CNBC

[mountaineer]

Malinowski Reveals Millions of Dollars in Undisclosed Stock Trades
New Jersey Democrat under investigation for apparent STOCK Act violations
Matthew Foldi • October 21, 2021 5:05 pm

Just days after entering his financial assets into a blind trust to sidestep ethics questions over his failure to disclose stock transactions in a timely manner, New Jersey Democrat Tom Malinowski revealed 86 new financial transactions worth up to $1.97 million that he failed to disclose when he originally made them.

Those transactions, disclosed on Aug. 26, date back to January 2019, his first month as an elected official. Together they were valued at between $373,086 and $1,970,000, according to a Washington Free Beacon analysis. The disclosure came just a week after Malinowski on Aug. 17 entered his assets into a blind trust in hopes of sidestepping ethics concerns raised over his past violations of the STOCK Act, which requires members of Congress to report securities transactions worth over $1,000 within 45 days.

Malinowski failed to report any of the 86 newly disclosed stock transactions, made between January 2019 and March 2021, within the required 45 day timeframe. Also included in the report were 48 amendments to financial transaction disclosures that were filed inaccurately.

A report by Business Insider in March that Malinowski had repeatedly violated the STOCK Act in his first two years as a congressman led to numerous ethics complaints against the New Jersey Democrat. The House Ethics Committee announced on Thursday afternoon that its members had voted to continue its investigation into whether Malinowski violated the STOCK Act, noting that he "may have violated House rules, standards of conduct, and federal law." ... Washington Free Beacon

[mountaineer]

Burr’s Brother-in-Law Called Stock Broker, One Minute After Getting Off Phone With Senator
According to the SEC, Sen. Richard Burr of North Carolina, then chairman of the Senate Intelligence Committee, had material nonpublic information about coronavirus impact. He and his brother-in-law dumped stock before the market dropped in March 2020.
by Robert Faturechi
Oct. 28, 12:05 p.m. EDT

After Sen. Richard Burr of North Carolina dumped more than $1.6 million in stocks in February 2020 a week before the coronavirus market crash, he called his brother-in-law, according to a new Securities and Exchange Commission filing. They talked for 50 seconds.

Burr, according to the SEC, had material nonpublic information regarding the incoming economic impact of coronavirus.

The very next minute, Burr’s brother-in-law, Gerald Fauth, called his broker.

ProPublica previously reported that Fauth, a member of the National Mediation Board, had dumped stock the same day Burr did. But it was previously unknown that Burr and Fauth spoke that day, and that their contact came just before Fauth began the process of dumping stock himself.  ...

In its filings, the SEC also alleges, for the first time, that Burr had material nonpublic information about the economic impact of the coming coronavirus crisis, based on his role at the time as chairman of the intelligence committee, as a member of the health committee and through former staffers who were directing key aspects of the government response to the virus.

The week after the trades, the market began its crash, falling by more than 30% in the subsequent month.

Burr came under scrutiny after ProPublica reported that he sold off a significant percentage of his stocks shortly before the market tanked, unloading between $628,000 and $1.72 million of his holdings on Feb. 13 in 33 separate transactions.  ...

Propublica

[Killer Clouds]

I don't care what party these politicians are from,  if they are insider trading they should be doing time in prison and stripped of their job and funds. I'm sure Martha Stewart would agree.