GOP Violations Of Insider Trading Law Shows The Need To Improve The STOCK Act

Louise Slaughter, ranking Democrat on the House Rules Committee, has sent a letter to the SEC, the Justice Department, the House Ethics Committee, and the Office of Congressional ethics asking for an investigation into possible illegal stock trading by members of the Republican party, something Slaughter describes as a “major stock trading scandal among House Republicans”.

This all got started when reporters overheard Republican Representative Chris Collins from upstate New York talking about “how many millionaires I’ve made in Buffalo the past few months.” Collins is the largest shareholder and board member of an Australian pharmaceutical firm called Innate Immunotherapeutics and apparently has been touting the firm all over the place. Subsequent reports indicated that Collins was involved in legislation that could benefit the company, triggering concerns about insider trading.

Collins also convinced then House Budget Committee Chairman and now HHS Secretary Tom Price to invest in Innovate and it is alleged that Price also worked on legislation that would effect Innovate. Price has also been shown to have been buying and selling shares in companies that his budget proposals would impact and, although he claims that they have been “blind” trades place by his investment manager, on multiple occasions Price did direct the trades, sometimes immediately before introducing legislation or requesting regulatory intervention that would effect the stock in question. This appears to be a clear violation of the STOCK Act and, unsurprisingly for Trump’s cabinet, Price lied about his actions in his Senate confirmation hearings to become HHS Secretary.

Last week, it was reported that New Jersey’s two wealthiest members of the state’s Congressional delegation, Tom MacArthur and Rodney Frelinghuysen, both transacted in health care securities as the debate over the AHCA was raging. Frelinghuysen managed to sell some of his health care stocks at yearly highs and MacArthur purchased over $800,000 of health care stocks as the debate over the AHCA wound through the House.

At this point, it would be important to remember that MacArthur was the head of the moderate Tuesday Caucus that had scuttled the first version of the AHCA. It was only with his efforts to compromise with the Freedom Caucus and actually propose a worse bill that the current version of the AHCA was able to pass. People can draw their own conclusions.

Besides engaging in questionable ethics, it is quite probable that all these Republicans have been violating the STOCK Act. This law was passed in 2012 in order to restrict the use of non-public information for personal gain. The law is not all encompassing and has as many loopholes as Swiss cheese and I can say with some certainty that Democrats probably abuse the law as well. But it appears that the violation of the spirit, if not the letter of the law, has become pretty brazen. Which is all the more reason why Slaughter’s investigation needs to be done. If many of these trades were technically legal, I’m pretty sure the public would be outraged to know.