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4 House Democrats just violated a federal conflict-of-interest law with late financial disclosures

·6 min read
rep josh gottheimer new jersey
Rep. Josh Gottheimer, a Democrat from New Jersey, is one of the latest members of Congress to violate the Stop Trading on Congressional Knowledge Act of 2012 with a late stock-trade disclosure.Bill Clark/CQ Roll Call/Getty Images
  • Four Democratic members of Congress broke a federal conflict-of-interest and transparency law.

  • Reps. Josh Gottheimer, Mary Gay Scanlon, Susie Lee, and Brad Schneider disclosed financial trades late.

  • Congress is actively considering whether to ban lawmakers and their spouses from trading stocks.

Four more Democratic members of the House of Representatives have violated a federal conflicts-of-interest and transparency law, according to an Insider review of new congressional financial disclosures.

Reps. Josh Gottheimer of New Jersey, Mary Gay Scanlon of Pennsylvania, Susie Lee of Nevada, and Brad Schneider of Illinois failed to follow the Stop Trading on Congressional Knowledge Act of 2012.

The law requires members of Congress to report stock and other financial trades for themselves and their spouses within 45 days of making them or face financial penalties.

Rep. Mary Gay Scanlon
Rep. Mary Gay Scanlon.Andrew Harrer/Getty Images

Scanlon's husband sold four stocks in February 2021 collectively worth up to $95,000 and exchanged up to $15,000 in shares of DuPont de Nemours early that same month, according to a disclosure she filed August 12 — almost a year-and-a-half after the fact.

Lawmakers are not required to provide the specific value of their trades, and instead, report them in broad ranges.

Carina Figliuzzi, Scanlon's spokesperson, told Insider that Scanlon "discovered that certain transactions in her husband's retirement account, which is managed by an independent financial advisor, had not been reported in a previous filing."

Figliuzzi noted that Scanlon has since paid a $200 late fee — the standard penalty for violating the STOCK Act with late disclosures — and implemented "additional procedures to ensure that such transactions will not be overlooked in the future." Figliuzzi added that Scanlon herself doesn't trade individual stocks, which Insider verified.

Democratic Rep. Josh Gottheimer of New Jersey outside the Capitol on October 21, 2021.
Democratic Rep. Josh Gottheimer of New Jersey outside the Capitol on October 21, 2021.Bill Clark/CQ-Roll Call, Inc via Getty Images

Gottheimer and his wife exchanged up to $15,000 of stock in Independent Bank Corp. in November 2021, but waited until August 2022 to report it, according to a financial disclosure he filed August 13.

"No shares were bought or sold here. It was just an exchange," said Chris D'Aloia, Gottheimer's spokesperson. "When our office was notified of this exchange on August 10 of this year, we immediately filed."

Additionally, D'Aloia said that before taking office, the representative "turned over management of his retirement savings and investments to a third party, who has full investment discretion."

In February, Gottheimer said he would go further and establish a blind trust for his assets.

Congress considers a "qualified blind trust," a formal arrangement requiring congressional approval, to be the "most comprehensive approach" to avoiding "potential conflicts of interest or the appearance of such conflicts." Such a blind trust requires a lawmaker officially transfers management of their financial assets to an independent trustee, and they can be expensive and time-consuming to establish.

At present, Gottheimer has not formally established one, according to House records.

Democratic Rep. Susie Lee of Nevada.
Democratic Rep. Susie Lee of Nevada.Chip Somodevilla/Getty Images

Lee, whom Insider previously found violating the STOCK Act by failing to properly disclose trades worth up to $3.3 million, has violated the law once again.

This time, Insider found that the congresswoman and her husband traded eight stocks during 2021 that Lee did not report until August 13.

Lee's office told Insider that the congresswoman's financial advisor "noted an inaccuracy in the list of trades" when preparing her annual disclosure and that she filed an updated report once she found out.

Her office also said Lee herself does not make the trades — a third-party money manager does — and that she's since been in contact with the House Committee on Ethics.

GettyImages brad schneider
Representative Brad Schneider (D-IL).Samuel Corum/Getty Images

Schneider, whom Insider previously found two months late in disclosing hundreds of thousands of dollars worth of trades in Trupanion, a pet insurance company, also has violated the STOCK Act once again.

A new filing shows that Schneider's wife sold up to $150,000 worth of Trupanion stock in February and December of 2021. But Schneider did not report the trades until August 13.

Schneider's Chief of Staff Casey O'Shea told Insider that "an investment partnership that his wife inherited from her father" owned shares of Trupanion and sold them without notifying Schneider. O'Shea said the trades were discovered when compiling Schneider's annual financial disclosure, and that Schneider has since paid a $200 fine for filing late.

 

Since 2021, Insider's "Conflicted Congress" project and other publications have together uncovered 69 lawmakers, now including Scanlon and Gottheimer, who have violated the STOCK Act by disclosing their trades late.

Democrats and Republicans alike continue violating the STOCK Act, which Congress itself passed in 2012 to defend against conflicts of interest, curb insider trading, and shine sunlight on public officials' personal financial dealings.

Insider additionally found at least 182 senior congressional staffers who also violated provisions of the STOCK Act.

Rep. Abigail Spanberger, a Democrat of Virginia, introduced the TRUST in Congress Act, which would require all ,embers of Congress put certain investment assets in a blind trust.
Rep. Abigail Spanberger, a Democrat of Virginia, introduced the TRUST in Congress Act, which would require all members of Congress put certain investment assets in a blind trust.Win McNamee/Getty Images

The great stock trading debate

And as these four Democratic members of Congress continue to trade stocks, their peers are debating whether lawmakers and their spouses should even be allowed to trade at all.

"You know what, if we can't keep to deadlines as they are prescribed by law," Democratic Rep. Abigail Spanberger of Virginia told Insider, "then maybe we should take one thing off our plate."

House Democrats plan on unveiling a ban on stock trading soon with a vote possibly coming in September, according to a report from early August.

Speaker of the House Nancy Pelosi originally opposed a congressional stock-trade ban, declaring in December 2021: "We are a free-market economy. They should be able to participate in that."

She later switched her stance after receiving sharp criticism from both sides of the aisle.

But even with Pelosi's approval, there's debate within Congress as to how far the body should go in limiting federal lawmakers' personal financial decisions. Three of the Democrats found in recent violation of the STOCK Act say they support some variation of a congressional stock-trade ban.

Scanlon's spokesperson told Insider that the representative, who is the vice chair of the House Administration Committee, which is intimately involved in the crafting of a congressional stock ban, "is a proud original cosponsor of the Ban Conflicted Trading Act to ban congressional stock trading and ensure accountability."

Lee's spokesperson, Zoe Sheppard, said that "Rep. Lee supports a ban on members of Congress directing trades of individual stocks."

Gottheimer said in a press release that he cosponsored the "TRUST in Congress Act" which requires members of Congress to place their holdings into a blind trust. Gottheimer is currently in the process of placing his assets into a blind trust, per the release.

Read the original article on Business Insider