Here Are The Congressional Aides That Traded On Insider Information Over The Past Year

ZERO HEDGE–Up until April 2012, members of Congress and their staff were the only people in the country actually allowed to trade stocks on insider information.  That was supposed to change with the passage of the STOCK (Stop Trading on Congressional Knowledge) Act which was signed into law by Barack Obama on April 4, 2012.  But, as we all know, laws are only meaningful to the extent our legislators and bureaucracies are willing to enforce them.

Given that intro, it is with great ‘shock’ that we share with you the results of a Politico study which would seem to suggest that Congressional aides continue to trade on insider information on a fairly regular basis despite the existence of the STOCK Act.  We guess the SEC didn’t take seriously the STOCK Act’s attempt to “criminalize behavior that is normal.”

The first such example of a “questionable” trade comes to us from Daniel Swanson, an aide to Senator Dick Durbin (D-IL) of the Judiciary Committee…why does it not surprise us that our first example comes from Illinois?  As Politico notes, Swanson made some very “timely” trades in Mylan late last year as he managed to dump up to $60,000 worth of stock just two days before the DOJ levied a $465 million penalty on the company for their EpiPen billing practices.  Ironically, Swanson’s boss worked with the DOJ on the Mylan settlement…

On Sept. 28, 2016, three members of the Senate Judiciary Committee sent a letter to the Justice Department suggesting that the drug company Mylan was violating Medicaid laws.

Nine days later, the Justice Department reached a massive $465 million settlement with the firm.

In between, another action happened almost invisibly: A Judiciary Committee aide to Sen. Dick Durbin (D-Ill.) dropped somewhere between $4,004 and $60,000 in Mylan stock from his and his child’s portfolios.

If an aide had done the same thing in the executive branch, he or she could be investigated for violating federal conflict-of-interest law. But the Durbin aide’s ownership of shares of Mylan, and their timely sale, are reflective of Congress’ persistent refusal to crack down on stock trading by staffers, even in firms overseen by their committees.

…but we’re sure the timing of the trade was just a coincidence.

But it’s not just Swanson, Paul Ryan’s Chief of Staff has also managed to get really “lucky” on the timing of some trades over the years.

David Hoppe, a fellow Wisconsin native and former Hill aide, to serve as his chief of staff. Hoppe left lobbying jobs with both his own firm, Hoppe Strategies, and the K Street powerhouse Squire Patton Boggs to work for the new speaker. After he moved back through the revolving door, Hoppe continued to trade stock in companies with interests before Congress.

David Hoppe, a longtime Capitol Hill aide-turned-lobbyist, joined the speaker’s office in late 2015 as Ryan became speaker of the House. Through personal accounts, Hoppe and his wife bought and sold shares in dozens of stocks while Hoppe worked at the speaker’s office, including purchases of energy and pharmaceutical stocks made shortly before Congress passed bills benefiting the companies he traded.Hoppe told POLITICO he did not discuss any stock trades with his brokers while working for Ryan.

And the list goes on and on…

Diane Dewhirst, deputy chief of staff to House Minority Leader Nancy Pelosi, disclosed her spouse’s purchase of stock in two pharmaceutical companies, Astrazeneca and GlaxoSmithKline, in December 2016, shortly before Congress passed a medical research bill that benefited both companies.

Meanwhile, on the House Energy and Commerce Committee, which sets energy policy and is the main committee overseeing Obamacare, at least six aides have bought and sold stock in companies with interests in the work of the committee. One longtime committee aide in an oversight role bought and sold more than two dozen health care and energy stocks during 2015 and 2016 and sold his stock in Express Scripts, the prescription drug sales company, as the company came under scrutiny over its role in setting drug prices last October.

On the House and Senate appropriations committees, which make broadly influential spending and policy decisions through annual government funding bills, at least 18 House aides and 14 Senate aides have bought or sold at least one stock, through their own accounts or family members’. For example, one senior House Appropriations aide working for a member focused on energy and water funding has, through various family accounts, bought and sold shares in companies including Royal Dutch Shell, Energy Transfer Partners, Dow Chemical and Emerson Electric. Another longtime aide on the committee’s staff who is focused on investigations and research, which are at the heart of the committee’s decision-making, holds and trades stock in companies with major interests in the committee’s work, including pharmaceutical companies such as GlaxoSmithKline and energy companies such as Occidental Petroleum.

Of course, proving that a Congressional aide traded on insider information can be next to impossible which is precisely why watchdog groups have long called for staffers to be restricted completely from trading stocks of companies that have business before their committees.

Government watchdogs say that, at a minimum, staffers should be prevented from buying shares of companies with business before their committees. But they are not. And despite the disparity between the rigorous standards for the executive branch and the laxness of Congress, the House and Senate have taken a permissive approach even to enforcing existing rules.

That’s a serious problem, watchdogs say, because aides often have more of a hands-on role than the members themselves in crafting details of legislation that could have enormous consequences for individual companies. And because aides are rarely in the spotlight, there’s more potential for ethical lapses to go unnoticed.

“The staff level is actually more dangerous, because they don’t get scrutiny and they’re not accountable,”said Meredith McGehee, chief of policy at Issue One, a watchdog group for money and politics. “If a member does it, he can get defeated. A staff person can wield enormous amounts of power that isn’t seen, and there’s really no way to hold that staff accountable.”

But we’re sure this is just an attempt by Politico to “criminalize behavior that is normal…”


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