'The Looney Tunes took over': Republicans explain why they aren't voting GOP in NYT report
November 2, 2018, 6:24 PM ET
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Newhouse is the latest among 13 lawmakers Raw Story has so far identified this year to violate the Stop Trading on Congressional Knowledge (STOCK) Act, which requires federal lawmakers to report within 45 days any individual stock, bond, Treasury security or cryptocurrency transactions they, their spouses or dependent children conduct.
“In reviewing their finances, the congressman’s spouse noticed an oversight in her filing and took immediate steps to rectify it as soon as possible,” Mike Marinella, Newhouse’s press secretary, said in a statement to Raw Story. “The congressman and his family have always been and will continue to be fully transparent about their finances which is why it was corrected immediately.”
Newhouse reported 61 separate stock transactions on a May 26 financial disclosure, each in the $1,001 to $15,000 range. Federal lawmakers are only required to disclose the value of such stock transactions in broad ranges.
Rep. Dan Newhouse (R-WA) was late disclosing up to $765,000 in personal stock transactions. Alex Wong/Getty Images
Only 10 of the transactions were in compliance with the STOCK Act’s reporting deadlines. Newhouse disclosed stock purchases and sales across a variety of industries, including tech, financial services, agriculture, pharmaceutical and energy companies such as Apple, Tesla, Citigroup, Deere & Company, Eli Lilly and Company, Marathon Petroleum and NextEra Energy.
Newhouse serves on several U.S. House committees and appropriations subcommittees that have oversight jurisdiction for some of those industries. His appointments include:
- House Select Committee on Strategic Competition between the United States and the Chinese Communist Party
- House Committee on Appropriations
- Subcommittee on Agriculture, Rural Development, and Food and Drug Administration
- Subcommittee on Energy and Water Development
- Subcommittee on Homeland Security
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“The purpose of the law is to give the public notice of trades soon after they're made, and that purpose is defeated if the trades aren't reported until a year or more after,” said Kedric Payne, vice president, general counsel and senior director of ethics at the Campaign Legal Center, a nonpartisan government watchdog organization.
Newhouse’s congressional office did not confirm whether or not he would need to pay a fine for the late disclosure. The standard fine is $200.
“If you had a higher penalty, I think it would get the attention of lawmakers a lot quicker,” Payne said. “That $200 penalty is from the 1970s. If you change that to just adjust it for inflation, I think then you'll start to get people's attention.”
‘Updated guidance’
Another Washington state congressman, Rep. Rick Larsen (D-WA), was seemingly late in reporting 28 financial transactions totaling up to $420,000 — an ostensible violation of the STOCK Act.
But his congressional office said conflicting guidance from the House Committee on Ethics caused Larsen to not report until last week stock trades he made as far back as 2020.
“In 2020, while setting up a managed IRA account to diversify his portfolio, Rep. Larsen received initial guidance from the House Ethics Committee that he did not need to file Periodic Transaction Reports because he did not control selection or trade of any security in the new portfolio,” Joe Tutino, a spokesperson for Rep. Larsen, told Raw Story in a statement.
RELATED ARTICLE: Can’t stop, won’t stop: Another congressman violates STOCK Act
“In 2022, upon reviewing Rep. Larsen’s draft financial disclosure, Committee staff informed him of updated guidance that required the representative to file a periodic transaction report to come into compliance with the STOCK Act. He worked with Committee staff to file the required periodic transaction report,” Tutino continued.
Larsen’s financial disclosure report, filed on May 26, noted stock transactions for Larsen’s individual retirement account across a variety of industries, including semiconductors, defense, pharmaceuticals, insurance and transportation. He traded individual stocks in companies that include Allstate, Bristol-Myers Squibb, CVS, Intel, Sempra, General Dynamics and Union Pacific.
Rep. Rick Larsen (D-WA) said the House Committee on Ethics gave conflicting advice on filing his financial disclosures. Chip Somodevilla/Getty Images
Larsen is a member of the House’s Transportation and Infrastructure Committee and is co-chairman of the U.S.-China Working Group.
All stock transactions were in the $1,001 to $15,000 range.
“This managed account within the RRL IRA was set up late 2020. At the time I received guidance that due to the account being one where I did not control selections or trades, I did not need to file PTRs. That guidance has since changed and am reporting per new guidance,” Larsen said in the report.
Tutino said Larsen is waiting to hear back from the House Committee on Ethics as to whether he must pay a fine.
“Rep. Larsen is committed to transparency. Rep. Larsen does not select or trade individual stocks, per his contract with his financial adviser, and he will continue to be prohibited, per contract, from making selection or trade of any security,” Tutino said. “Going forward, Rep. Larsen’s financial adviser will notify him of any actions relevant to STOCK Act compliance after the account manager takes the action, and Rep. Larsen will be reporting those actions in periodic transaction reports.”
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It is unclear whether the House Committee on Ethics considers Larsen’s late stock disclosures an official violation of the STOCK Act.
Tom Rust, staff director and chief counsel for the House Committee on Ethics, which is tasked with investigating alleged STOCK Act violations, said “no comment” when reached by Raw Story.
“It's hard to believe that he received guidance that you don't have to report a stock transaction just because you don't control this transaction because the law is written anticipating that you may not be the person making the transaction,” Payne said.
Payne said he was not aware of any changes to reporting policies outlined in the STOCK Act.
“It just strains credibility to think that the Ethics Committee advised anyone that there's an exception that doesn't exist, so this looks as though it was a violation of the rule,” Payne said. “Maybe he misunderstood it, but the rules haven't changed.”
Continued violations
Dozens of members of Congress have failed to comply with the STOCK Act. During the 117th Congress from 2021 to 2022, at least 78 members of Congress — Democrats and Republicans alike — were found to have violated the STOCK Act's disclosure provisions, according to a tally maintained by Insider.
Raw Story has this year identified 13 members of Congress, including Newhouse, who have broken the federal conflicts of interest law.
Last week, Raw Story reported that Rep. Adrian Smith (R-NE) was more than a year late disclosing up to $45,000 of his wife’s purchases of stock in CarterBaldwin.
Six representatives failing to report up to $376,280 in stock transactions in May were Rep. Jonathan Jackson (D-IL), Rep. Debbie Dingell (D-MI), Rep. Russ Fulcher (R-ID), Rep. Marcy Kaptur (D-OH), Rep. Deborah Ross (D-NC) and Rep. John Sarbanes (D-MD).
Raw Story identified other STOCK Act violators in recent weeks, including Rep. Zoe Lofgren (D-CA), with up to $265,000 in late financial disclosures, and Rep. Dan Bishop (R-NC), who was late in disclosing up to $5 million in U.S. Treasury note purchases.
Earlier this year, Raw Story also broke the news that Rep. Seth Moulton (D-MA) failed to properly disclose that his wife sold up to $100,000 worth of stock in gaming company Activision Blizzard in September 2022 and purchased up to $15,000 worth of stock in Amazon.com in August 2022.
Raw Story reported that Rep. Gerry Connolly (D-VA) was several days late disclosing that he had sold personal stock in an energy company and a pair of federal defense contractors. Sen. Tom Carper (D-DE) also violated the STOCK Act in March with a late disclosure.
Congressional stock ban efforts
The ongoing violations come at a time when a bipartisan group of lawmakers have introduced several similar bills aimed at banning congressional stock trading.
The most recent bill to be introduced this session — the Bipartisan Restoring Faith in Government Act — is co-sponsored in part by political rivals in Reps. Alexandria Ocasio-Cortez (D-NY) and Matt Gaetz (R-FL).
Other materially similar bills include the Ending Trading and Holdings in Congressional Stocks (ETHICS) Act, the TRUST in Congress Act and the Preventing Elected Leaders from Owning Securities and Investments Act.
“I think there's a strong possibility that the legislation on stock trading will move, especially when you keep seeing public concern about the noncompliance with the STOCK Act,” Payne said.
RELATED ARTICLE: ‘I mistakenly left it in draft’: Republican violates STOCK Act with up to $5 million in late disclosures
The STOCK Act was passed by Congress in 2012 to prevent insider trading, promote transparency and reduce conflicts of interest among federal lawmakers and other government officials.
In the decade since, the push for a total ban on lawmakers trading stocks while in office gained but then lost momentum last year when the Democratic-led House, then led by Speaker Emerita Nancy Pelosi, decided not to conduct a hearing on any of stock-ban bills and never brought it to the House floor for a vote.
News organizations including the New York Times, Insider, NPR and Sludge have documented rampant financial conflicts of interests among dozens of members of Congress, such as those who bought and sold defense contractor stock while occupying positions on congressional armed services committees or otherwise voting on measures to send such companies billions of federal dollars. The executive and judicial branches are riddled with similar financial conflict issues, too, as the Wall Street Journal has reported.
The Wall Street Journal won a 2023 Pulitzer Prize for its investigation into financial conflicts among officials who work in federal agencies while Insider won the Society of Professional Journalists’ Sunshine Award for its reporting on congressional financial conflicts.
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