Trust Congress? Some say stocks trade away confidence in lawmakers
An investigation of a North Carolina politician led to questions about whether members of Congress use the information obtained in the U.S. Capitol to serve the public or line their pockets.
Sen. Richard Burr was accused in 2020, but later cleared, of making decisions about his stock trades using insider information he obtained as a senator ahead of the COVID-19 pandemic. That launched two federal investigations into Burr’s actions and forced him to resign from the Senate Intelligence Committee.
And Burr wasn’t alone. Several other members of Congress found themselves caught up in similar investigations as the pandemic struck the United States.
To prevent any perception of impropriety, some House members want their colleagues to sell off their individual stocks or put them in a blind trust.
Reps. Abigail Spanberger, a Democrat from Virginia, and Chip Roy, a Republican from Texas, filed a bipartisan bill called the TRUST in Congress Act that, if passed, would end individual stock trading.
Reps. Jeff Jackson and Alma Adams, Democrats from Charlotte, and Rep. Wiley Nickel, a Democrat from Cary, signed on as co-sponsors of the bill. Rep. Valerie Foushee, a Democrat from Orange County, also supports the bill and plans to co-sponsor it, her office said after this story published online.
“We’ve seen people get elected and turn around and use their position to trade stocks and make money,” Jackson told McClatchy. “In order to earn people’s trust, it’s not enough to just say, ‘I’m not going to do that.’ You have to show them, and one of the best ways to do that is not to own individual stocks.”
North Carolina’s lawmakers aren’t immune to accusations of using their congressional offices to succeed in the stock market. We looked at the stocks they’ve traded in recent years, even as Congress considers silencing critics by handcuffing its members from making individual stock trades. Here’s what public records show.
STOCK Act, TRUST Act
Congress in 2012 passed the Stop Trading on Congressional Knowledge Act, better known as the STOCK Act.
The law banned buying or selling stocks based on nonpublic information obtained as a member of Congress and forced lawmakers to disclose stock trades no later than 45 days after the transaction.
Public disclosures are posted to the House and Senate clerks’ websites, allowing constituents to get an idea of what their representative is trading and whether a conflict might exist. The form leaves much to be desired, though, with descriptions like “sold,” “partial sale” or “purchase” instead of amounts bought and sold or prices.
Jackson’s financial disclosure records indicate he and his immediate family do not own any individual stocks.
But that’s not true of all of his colleagues from North Carolina, whom Jackson says he has not spoken to about the TRUST Act.
North Carolina lawmakers’ stock trades
Sixteen individuals represent North Carolina in the House and Senate. Seven of them have financial disclosure statements indicating they have not traded or owned individual stocks between Jan. 1, 2021, and the present.
Four more held or traded five or fewer stocks.
Both Reps. Virginia Foxx, a Republican from Banner Elk, and Kathy Manning, a Democrat from Greensboro, have portfolios worth more than an estimated $10 million.
No other lawmaker from the state comes close to that.
After Foxx and Manning, Reps. Nickel, Deborah Ross and David Rouzer either had or still hold the largest portfolios.
But Nickel sold off his stock holdings once elected to Congress, according to Nickel’s spokesman, Kevin Porter.
Porter added that Nickel committed not to trade stocks while serving in Congress.
“Congressman Nickel firmly believes in government transparency and common sense reforms to ensure that elected officials are working for the people, not themselves,” Porter said.
In September, The New York Times examined the stock portfolios of every member of Congress between 2019 and 2021 and flagged three in North Carolina for potential conflicts: Manning, Foxx and Ross.
Kathy Manning
Hailey Barringer, a spokeswoman for Manning, told McClatchy that the congresswoman uses a third party to control her stock holdings. Trusts and accounts are listed under each of her stock holdings on financial disclosure forms.
“Congresswoman Manning and her husband have no discretion or control over the underlying assets held in the accounts,” Barringer said.
But the newspaper flagged Manning for the timing of sales and purchases in four pharmaceutical companies: AbbVie, Amgen, Johnson & Johnson and Viatris.
Manning sits on the Education and Labor committee and made the trades only a week after the committee chair introduced a bill negotiating drug prices, the Times reported.
Financial disclosure reports show Manning still invests in three of those companies.
It also flagged her work on the Subcommittee on Higher Education and Workforce Investment while owning stock in Aon and Microsoft. Both companies have had representatives testify before the committee.
Records indicate she continues to hold stock in both companies.
Virginia Foxx
The Times report cited three potential conflicts with the 37 companies Foxx owned at the time.
Those included trading BP and Exxon while sitting on the Oversight Committee and GSK while serving on both the Oversight and the Education and Labor committees. GSK had worked with the committees on drug pricing legislation.
Foxx still owns stock in GSK, her financial disclosure reports state.
Her spokesman, Alex Ives, said the oversight committee “has a very wide jurisdiction that covers most issue areas. Anyone can make a claim of a potential conflict of interest toward any member of that committee — both Republican and Democrat.”
Deborah Ross
Ross traded 17 companies and the Times found three potential conflicts, in trading Applied Materials, Microsoft and NeoGenomics while working on the Science, Space and Technology subcommittees for energy and research.
Microsoft testified before the research subcommittee about election security.
“Congresswoman Ross complies with all House rules and federal laws concerning stock trading and supports robust enforcement of the STOCK Act,” said Josie Feron, spokeswoman for Ross, in a written statement to McClatchy. “Furthermore, she has never used confidential or classified information received as a member of Congress to inform any financial or transaction, and has not taken any legislative action based on her financial interests.”
Feron added that Ross supports the TRUST in Congress Act and will abide by whatever rules are in place.
Trusting Congress
Business Insider rated the stock trades of North Carolina’s lawmakers and gave the best possible ranking — “solid” — to Foxx, Manning and Ross, though the publication dinged two other lawmakers for potential violations by their staffers.
Rep. Patrick McHenry, a Republican from Denver, was also faulted in the report for once having to revise a financial disclosure report due to an error. He serves as chair of the House Finance Committee and has traded only two companies since 2021: Dominion Energy Inc. and Marsh & McLennan Companies Inc.
Campaign Legal Center, a nonpartisan watchdog organization that supports the TRUST in Congress Act, began looking into the stock holdings of members of Congress after learning about the four senators accused of insider trading who made trades after attending a closed-door briefing about the impeding pandemic and just before the stock market crashed.
“All the rest of us were kind of in the dark, and then they were trading stocks based on that information or selling off stocks,” said Delaney Marsco, senior legal counsel for ethics at the Campaign Legal Center. “Even members of Congress who weren’t clearly engaged in insider trading related to those briefings were still very much engaged in kind of like selling off their portfolio in those early months of the pandemic, buying things that would stand to improve as a result of the pandemic and selling stocks that would suffer in the face of the pandemic.”
Marsco said that the Campaign Legal Center began researching what stocks members of Congress held and what conflicts of interest might exist.
“There’s no requirement that they don’t buy or sell stocks while Congress is in session or there’s no requirement that someone who sits on the Energy Committee is not allowed to buy or sell stocks in fossil fuels or whatever,” Marsco said, adding that that tends to shock people. “There’s no other restriction on members of Congress buying and selling, so, of course, that presents a lot of opportunities for possible conflicts of interest.”
She added that members of Congress get access to all kinds of information that, while it may not fall under the category of material, nonpublic information whose use is restricted by federal law, it still is not readily available to everyone else.
Blind trusts
The TRUST in Congress Act wouldn’t just ban lawmakers from trading individual stocks, but would also extend the ban to their spouses and dependent children.
If the bill passes, stocks owned by any of those immediate family members, or the lawmaker themselves, would have to be placed in a blind trust until 180 days after the lawmaker finishes serving.
A trustee would take control of the members’ stocks, sell off all the assets and then buy fresh so that the portfolio is different from what was originally put in, giving a member of Congress no way of knowing what is in their trust. And that would ensure that the decisions they made in Congress have nothing to do with what’s in their portfolios.
But not everyone is on board with the idea because it’s expensive and takes time.
The Canadian government combats part of that problem with a subsidy to help public servants set up the trust and incur less in out-of-pocket expenses. That hasn’t been done in the United States.
And lawmakers still argue that if they take the time to set up the blind trust and then lose their reelection bid after two years, they wasted that time and have to undo everything.
Bill support
Spanberger and Roy tried to get their bill to the floor during the last congressional term, but it didn’t seem possible until the fall, when then-House Speaker Nancy Pelosi said she would make it happen.
But the session ended without any action being taken.
McClatchy asked every member of Congress from North Carolina whether they supported the bill. Eight replied.
Reps. Foxx, David Rouzer, Don Davis, Greg Murphy, Richard Hudson and Dan Bishop did not respond.
Foushee, who supports the bill, did not reply to inquiries for the article until after McClatchy published it due to a staff member being sick.
McHenry declined to comment. Both senators said they would wait to comment until if the bill made it to their chamber.
Barringer pointed out that Manning previously cosponsored a similar bill.
Rep. Chuck Edwards, a Republican from Hendersonville, wrote back through a staff member to check his financial disclosure for the answer. He holds stock in McDonald’s, the same corporation of which he owns several franchises.
“This is the strongest bill I’ve seen for personal finances,” Jackson said, when asked whether he thought the bill goes far enough, “but there’s more that needs to be done for transparency and trust.”
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This story was originally published February 15, 2023 at 5:25 AM.
