At least 48 members of Congress and 182 top Capitol Hill staffers have violated a law meant to increase transparency and prevent conflicts of interests around stock trading in Washington, a recently released Insider investigation found.
According to the Insider report, members of both major parties have violated the STOCK Act, with violations between Democrats and Republicans about even. Most of the violations from Capitol Hill staffers and Congress members are due to late reporting, with some disclosures coming as late as four years. Many of these disclosures demonstrate conflicts of interest between lawmakers’ investments and the industries they govern.
Though late reporting violations come with a fee, these fees amount to what is essentially a slap on the wrist for members of Congress, the majority of whom are millionaires. Fees are typically just several hundred dollars, while many of the stock trades by members of Congress are worth hundreds of thousands of dollars — if not millions or tens of millions.
Though some of the violations were for trades of small value or only a few days late, other late disclosures were egregious, Insider found. This year, Rep. Pat Fallon (R-Texas) made dozens of stock trades that he disclosed months late, worth around $17.5 million total.
Rep. Tom Malinowski (D-New Jersey) didn’t disclose dozens of trades that he made this year and last year until he was prodded by reporters; Sen. Tommy Tuberville (R-Alabama) was late to disclose nearly 130 stock trades from the first half of this year. Rep. Diana Harshbarger (R-Tennessee), meanwhile, failed to properly report over 700 stock trades that she and her husband made this year — worth as much as $10.9 million.
Several of the nearly 200 Capitol Hill staffers who violated the STOCK Act gave questionable excuses for not obeying the law. Despite being required to attend ethics training that covered trading rules, some staffers said that they weren’t aware of the law or that they weren’t sure how to disclose the trades. Many of the dozens of people that Insider reached out to for comment were unwilling to say why they violated the law.
An anonymous source who formerly worked for the Senate ethics panel said that lax enforcement is one of the reasons why late disclosures are so common. Monetary penalties are relatively low, starting at $200 for filings that are over 30 days late — and if it’s a staffer’s first offense or if they’re forthright about their reason for disclosing trades late, they are often able to get the fee waived entirely. Although waivers are supposed to be rare, Insider found five staffers willing to provide copies of their waivers.
The investigation also found that many lawmakers have personal financial interests in industries that they’re tasked with regulating; for instance, 22 Democrats who typically vote on environmental and climate issues have reported owning stocks in major oil and gas companies like Exxon and Shell.
At least 15 members who serve on the Armed Services committees have had money vested in top defense contractors like Lockheed Martin, Boeing and Raytheon. Companies in the oil and gas and defense industries infamously receive hundreds of billions of dollars in government subsidies through direct bailouts and tax loopholes each year.
Lawmakers have also made questionable trades regarding the pandemic. Many government officials, including Federal Reserve Chair Jerome Powell, have come under fire over the past two years for making suspiciously opportunistic trades just before the pandemic triggered a market-wide crash or a boom in certain stocks.
The Insider report found that at least 75 lawmakers held shares in the three major vaccine makers — Johnson & Johnson, Pfizer and Moderna — as coronavirus vaccines were being developed last year. Officials were privy to information regarding the pandemic that was not available to the public.
These STOCK Act violations lend credence to progressive lawmakers’ campaign to bar top government officials from being able to trade stock altogether. Sen. Elizabeth Warren (D-Massachusetts) has introduced legislation that would ban stock trading for Members of Congress, Cabinet members, top staffers, federal judges and White House officials.
“We have entrusted these people with great power. They owe us great transparency,” Public Citizen’s Walter Shaub told Insider. “They are not even giving us minimal transparency.”
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