After being briefed on the coronavirus, Sens. Richard Burr (R-NC) and Kelly Loeffler (R-GA) dumped millions of dollars worth of shares of stocks, potentially using the information they used in the briefings.
When ProPublica and The Daily Beast broke the news this weekend, Sen. Minority Leader Chuck Schumer (D-NY) said there should be an ethics investigation. But one Minnesota representative says the problem isn’t just potential insider trading. It’s systemic.
“What happened over the weekend, you know, it’ll be someone else to determine whether or not there was insider trading involved,” said Rep. Angie Craig, who represents Minnesota’s Second District. “But the real question is, why in the world would members of Congress be allowed to trade individual stocks?”
Last June, Craig introduced the Halt Unchecked Member Benefits with Lobbying Elimination — or HUMBLE — Act. The bill would ban members from purchasing first-class airline tickets as a congressional travel expense, ban former members of congress from using congressional facilities, ban former members from becoming lobbyists and, most pertinently, the bill would ban members from owning shares of a company while they’re in office.
New supporters
Since the weekend, four new members signed onto the bill: Rep. Ilhan Omar, Craig’s congressional neighbor in Minneapolis; Rep. Alexandria Ocasio-Cortez (D-NY), Rep. Katie Porter (D-CA), and Rep. Ro Khanna (D-CA).
[image_caption]Rep. Angie Craig[/image_caption]
Omar announced her support on Twitter and nudged Ocasio-Cortez to do the same.
“Members of Congress should not be allowed to own individual stock,” Ocasio-Cortez said last week. “We are here to serve the public, not to profiteer. It’s shocking that it’s even been allowed up to this point.”
Omar responded: “They shouldn’t and [Angie Craig’s] bill bans them from doing just that. I am signing on to the Humble Act today and encourage members to do the same.”
Privileged information
While the conspicuous coronavirus stock sales drew attention to her bill, Craig said there’s a lot of information members of Congress are privy to that should prompt concern.
“I’ve been in these background briefings on Boeing over the last year where I walk out of the room and I think to myself, ‘My goodness, if I wanted to short Boeing right now, there’s opportunity there.’ It’s unbelievable that members of Congress are even allowed to have that capacity.”
Craig does not own any individual stocks and has committed to not buying any during her time in office. But in her mind, the problem isn’t about individual choices, it’s about a system that doesn’t hold representatives accountable.
“The two examples from the Senate that were disclosed last weekend — these are the kinds of stories that make my constituents not like politics, not like politicians — and you know, the truth is, you get one or two examples of people behaving that way and it makes constituents believe that everybody behaves that way,” Craig said.
“Our communities should know that when they send us there, it’s for one purpose and that’s to do what’s in the best interest of our communities.”
Hurrah for Rep. Craig. Insider trading should be illegal for members of Congress. Every Senator who participated in using their position to financially benefit should resign.
Do you believe it is currently legal for a member of Congress to benefit from insider trading? Representative Craig wants to make so members of Congress are not permitted to own stock while in office.
Cameron… exactly.
This is EXACTLY what’s needed. Thank you, Rep Craig. If we want to clean up the system we have to remove even the appearance corruption.
Gabe, why no mention of Feinstein doing the exact same thing Burr did? Or any of the Democrats that did it for that matter?
From The Hill: “ Feinstein, one the longest-tenured Senate Democrats, sold at least $500,000 in shares of Allogene Therapeutics, a California biotechnology company, on Jan. 31 and at least $1 million in Allogene stock on Feb. 18, according to Senate records.”.
Can we at least cut out the bias? They’re all doing it and it needs to stop. They shouldn’t be getting rich off insider knowledge.
The other individuals were found not to have engaged on insider information. Blind trusts and I think there was at least one that was selling off stock over a period of time that predated the information received by Congress.
Tell me…how is that insider trading? I mean, if you just found out that the plague was coming, would YOU sell off stock for a company that could possibly benefit from it? Unless there’s a plausible explanation for this, either she’s extraordinarily stupid, or she…didn’t sell the stock based on insider knowledge. I don’t think she’s stupid.
“Insider trading” is trading on nonpublic information. Trading based on what you heard in a classified Congressional briefing (“Government projections are that the airline industry will suffer”) would be insider trading, because it involves information not generally known to the public. Selling all your stock because, based on news accounts, you believe that we are facing so great a plague and mortality of men that was never remembered to have happened in any place before would not be insider trading, because it is not based on non-public information.
I know that this is many months after the fact, but I do know what insider trading is. My point is, if you own stock that would benefit from an oncoming plague, and you were aware of the oncoming plague, WHY WOULD YOU SELL IT? You would not benefit from such a premature sale. So, either you did not sell the stock as a result of inside knowledge, or you make very, very bad financial decisions. That is, the idea that the sale of that stock was insider trading was silly on its face.
Wasn’t it a hoax until like 10 days ago?
Bias? You mean, like focusing on Senator Feinstein’s stock sale without mentioning that her stocks are in a blind trust, and she has no involvement with the sales? Or that she didn’t go to the intelligence briefing that Senators Burr and Loeffler attended? Or that the stock that was sold on her behalf was in a company involved in cancer therapeutics, not infectious diseases?
Is that the kind of bias you mean: half truths, dredged up just because?
“Gabe, why no mention of Feinstein doing the exact same thing Burr did? ”
Bob, I always comment on moral vacuity of point to someone else who did something wrong as if it provides moral or legal sanction for bad behavior. Even if Feinstein did the same thing (which hasn’t actually been established) No one is arguint that it was OK for her to so.
This practice of the “personal responsibility” champions reflexively pointing to someone else every time they or one of their own gets caught doing something is not only hypocritical, but morally vacant. The bad behavior of one person does not sanction that behavior for anyone else… that’s ethics 101. You don’t have to be the ONLY person of have done anything ever to have done something wrong or illegal.
The only bias is yours.
Feinstein 1) did not attend the briefing with the inside information and 2) had no input into her stock sales because her stocks were in a blind trust. Those facts mean that Feinstein has done nothing wrong, legally or ethically.
Burr, on the other hand, did receive the inside information and did control his stock sales. That is why he is in ethical and legal trouble.
So, unbiased reporting would treat Feinstein’s and Burr’s situations differently, because they are very different. Any reporting that says they did exactly the same thing is objectively false. Either dishonest and biased, or just completely ignorant about how the law works.
Fake News. Dianne Feinsteins stocks may have been in a blind trust. The stock sales were her from her husbands which were not. Thanks for fudging facts.
Folks can still own stock in the form of a mutual fund, preferably not select funds, but, broad-based like a S&P 500 Index portfolio, or total market, that holds a broad market sampling. There are 100’s of those products in the market .What is ironic however, the right wingers are the ones always complaining about how corrupt congress and the senate are, Now here we are with the perfect opportunity to take a step or two forward and what do we hear, crickets! All talk, no walk.
Seems as though there were four Senators involved but I am not surprised that the other two were not mentioned. Preventing any lobbying position after serving seems to deprive citizens an opportunity of the freedom to work where they choose.
There were four that sold stock, but only two that may have engaged in insider trading. As pointed out elsewhere, Feinstein did not attend the briefing and her stocks were in a blind trust. Ron Johnson, sold millions in stock, but it was from his family’s company, which was not publicly traded. The sale was also in the works long before the crisis hit.
You might want to report the whole story as reported by Matt Levine on bloomberg.com
“Loeffler sold as much as $3.1 million worth of stock (the reports give only broad ranges for each asset), which sounds like a lot for a senator, until you remember that ‘the Atlanta businesswoman, whose husband is the chairman and CEO of the New York Stock Exchange, is worth an estimated $500 million.’ So she learned devastating news about a global pandemic and rushed out to sell … stock worth 0.6% of her net worth? Really? At that level of wealth that’s just a minor portfolio tweak . . .
Loeffler responded on Twitter by calling criticism of her stock sales ‘a ridiculous and baseless attack.’ The tweet said ‘I do not make investment decisions for my portfolio. Investment decisions are made by multiple third-party advisors without my or my husband’s knowledge or involvement.’ ”
That’s one impressive defense: “I’m so rich, it doesn’t matter to me. Also, I deny it.”
Case closed!
Just to be completely fair and non-biased, Senator Inhofe also sold stock, but he did not attend the briefing, and he had been selling all his stock off for the past year.
We have enough trouble getting people interested in running for public office. Now you want to force everyone elected to Congress to sell all their stocks of they are elected. Is this an underhanded way to disqualify anyone with a business background from running for office?
A better solution is transparency. Require all stock and bond trades by elected officials to be reported on-line in real time at least 1 hour before the transaction. That will discourage any insider trading. If not, the rest of us will be in on the insider tips and we can join in.
I like it!
A better solution is that we expect our elected officials to conform to high ethical standards, and that they may have to make some sacrifices to be in public service.
If you don’t like the rules, don’t run for office.
Have you invented a time machine? Otherwise, there is no way to report something before it happens.
Senator’s stock trades over $1K are already required to be reported sometime after they happen.I don’t know the window but it could be shortened. This information is public which is why reporters dug through these reports looking for people who may have violated insider trading laws. Of course, the same reporters neglected to make sure these people actually attended the classified briefing and that they had direct knowledge of the trades being placed. Silly little details.
Representative Craig’s plan is unrealistic and ignores other methods of insuring oversight over investments by our elected officials. And what does not owning stocks even mean? No individual stock ownership? What about a managed investment account? Stocks owned in an IRA or 401(k)? Under the HUMBLE Act stocks would have to be sold before taking office? Or running for office? Is she aware of the tax consequences of selling stock? What about closely held companies? The article mentions companies which are a different legal entity than corporations. Are existing laws against insider trading being used to their fullest extent? Deal with the few that are taking advantage of their position, or is there a large number of officials capitalizing on their inside knowledge? And what about the market manipulation caused by President Trump’s tweets? Has anyone looked into whether he or those close to him are profiting from that?
I think a former health care executive know what it means to own stock. I suspect the answers to your question are contained in the bill, maybe you should take a look at it.
Read all about it here https://www.congress.gov/bill/116th-congress/house-bill/3419/text
S5.19 “A Member, Delegate, or Resident Commissioner may not own the common stock of any individual corporation.”
No individual stock ownership? Correct.
Under the HUMBLE Act stocks would have to be sold before taking office? Or running for office? Yes. This would ammend existing House Rules known as the “Code of Official Conduct” which apply to all sworn members.
Stocks owned in an IRA or 401(k)? Allowed.
Is she aware of the tax consequences of selling stock? What about closely held companies? Good question. The text should be fixed to eliminate the word “common” to include preferred stock as well, and add the words “publicly traded”.
The Stop Trading on Congressional Knowledge (STOCK) Act was designed to combat insider trading. The law prohibits the use of non-public information for private profit, including insider trading by members of Congress and other government employees.
After a 60 Minutes segment on congressional insider trading in 2011, Republican Senator Scott Brown and Democratic Senator Kirsten Gillibrand introduced bills to combat the practice. In February 2012, the STOCK Act passed in the Senate by a 96–3 vote; the only no votes were senators Jeff Bingaman, Richard Burr, and Tom Coburn
The STOCK Act was modified on April 15, 2013, by S.716, a bill introduced by Senator Harry Reid. It was considered by the Senate and passed by unanimous consent. In the house, S.716 received only 14 seconds of discussion before being passed by unanimous consent
This bill didn’t just eliminate a controversial requirement that personal financial disclosures of tens of thousands of high level federal employees be made publicly accessible online. It also reversed two critical components of the original STOCK act: mandatory electronic filing of PFDs by the president, his cabinet and members of Congress, and the creation of a publicly accessible database.
Help me out here. The text of the bill does not seem to do that. It seems the last line is where the issues arise, Thanks:
Public Law No: 113-7 (04/15/2013)
(This measure has not been amended since it was introduced. The summary of that version is repeated here.)
Amends the Stop Trading on Congressional Knowledge Act of 2012 (STOCK Act) with respect to mandatory public, on-line reporting of financial disclosure statements by congressional staff and executive branch officers and employees.
Applies mandatory public, on-line reporting of financial disclosure statements only to Members of Congress, congressional candidates, the President, the Vice President, and executive branch officers at levels I and II of the Executive Schedule who require nomination by the President and confirmation by the Senate.
Extends until January 1, 2014, the deadline for:
the Secretary, the Sergeant at Arms, and the Clerk to develop systems to enable the electronic filing of financial disclosure reports as well as their on-line public availability;
the Director of the Office of Government Ethics to develop such systems for financial disclosure forms filed by covered executive branch officials.
Repeals: (1) the prohibition against requiring a login to search or sort the data contained in the publicly available financial disclosure systems, and (2) the requirement that a login protocol with the name of the user be utilized by a person downloading data contained in the reports.
Edward,
The amendment basically made it much more difficult for reporters to actually find information. What was an online searchable database become a trip to the basement of the records division to look thru individual pdf docs filed by 2900 congressional staffers. For no real purpose, passed quickly on a Friday afternoon by the (R) house, signed by Pres Obama without fanfare.
This article describes the problem.
https://www.npr.org/sections/itsallpolitics/2013/04/16/177496734/how-congress-quietly-overhauled-its-insider-trading-law
I notice that both congresspeople pointed to the portfolio managers, creating a hairline distinction between personally buying and selling stock vs. having someone else do it in your stead. The problem is many of us are not idiots and we know that few of these people actually buy and sell their stock personally under any circumstances, they ALL have managers, accountants, and brokers. To me the fact that these guys instinctively offer this explanation betrays their complicity. What they are NOT saying is that they had NO communications with their fund managers after receiving this information.
What they SHOULD be saying that they never directed anyone to buy or sell on their behalf, and they there never shared this information with the people who buy and sell on their behalf. And I don’t here them describing blind trusts. THAT would be the first thing someone would say if were the case, so clearly it’s not the case.
For enforcement purposes, there is a difference between having a fund manager sell your stock, and listening to the recommendation of your broker telling you to sell stock.
Having a blind trust is different from having a portfolio manager. It means you can’t have any input into the management of your stocks, thus legally insulating you from insider trading claims.
“ban former members from becoming lobbyists”
Seems like an even bigger deal in both resistance and impact.
Once they are out of office get them out of there: They are playing off the personal relationships they built up as elected officials to come back and influence their friends to the benefit of a special interest that is paying them.
Vin Weber is a multi-millionaire who never left Washington after being sent down the road in the 1990s. Erik Paulsen is not back in town applying his math skills at US Bank: He is out influence peddling.
As a small business person, I am inundated with “free advice” every day. It is worth exactly what it costs me: NOTHING.
Only in politics do we allow our elected officials to pass off the notion that “free advice” from lobbyists has value.
Quadruple congressional staff and research budgets, ban lobbyists completely and we will be billions of dollars ahead.
Rep. Craig has ZERO percent chance of these folks ever doing anything that limits the sweet occupational gig they are addicted to.
Sounds like a very sensible bill that has no prospect whatever of passage in our failed system of government.
The more profitable question is whether those in-the-know senators who sold (or directed the sale) of stock ahead of the COVID market meltdown will be civilly or criminally charged by the DOJ with insider trading before the statute of limitations expires. That’s also a method of “accountability”.
Sure sounds like Burr and the wealthy GA gal should be wearing orange jumpsuits. At a bare minimum they should have to explain themselves to a jury. We could then perhaps have the comic spectacle of some sitting senators doing time in jail, since I’m confident that a majority of NC and GA voters would find a Repub felon preferable to law-abiding Dem!
You’d think this would be a no-brainer for everyone in elected office. Along with a 10-year ban on lobbying activity after leaving office and campaign finance reforms. The US has been operating on minimal brain function for at least 40 years, so here we are.