The appearance of insider trading in the halls of Congress, brought to light by a “60 Minutes” expose in 2011, sparked a public outcry, resulting in the passage of the Stop Trading on Congressional Knowledge Act, or the STOCK Act, in 2012.
The law explicitly prohibits members of Congress from using inside knowledge they come across in the performance of their duties for private gain. Of course, members of Congress still need to manage their finances, and are free to trade stocks and other financial assets as they please, within the limits of the STOCK Act.
That said, just because a law is on the books doesn’t mean it can’t be broken. Last year, a handful of senators raised suspicions due to a flurry of well-timed sales last January and February, after receiving confidential briefings on the emerging threat of COVID-19.
Four senators — Sens. Richard Burr, Kelly Loeffler, Jim Inhofe and Dianne Feinstein — were investigated by the U.S. Justice Department for the scandal. No charges were brought and the investigation has been closed. Sen. Burr will not seek re-election in 2022, and Sen. Loeffler was defeated in a January run-off election by Raphael Warnock.
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The STOCK Act, Limitations and Transparency Tools
A 2013 amendment to the STOCK Act made some changes clouding the transparency and accessibility of Congress members’ financial transactions. Most notably, it removed a requirement for electronic filing and a searchable, sortable database of transactions.
However, one useful aspect of the legislation, which requires members to publicly report financial transactions in stocks, bonds and other assets within 45 days, remains intact.
It’s that stipulation that allows citizens to access information on what their representatives are trading. But since the 2013 amendment made records much more difficult to easily access, the need arose for a tool that could digitally comb records en masse and turn up new filings as they appear publicly.
Enter House Stock Watcher and Senate Stock Watcher, websites that do just that.
First came Senate Stock Watcher. “This was a project I’d started and initially built in a span of six hours or so, focused just on the Senate, actually,” says Timothy Carambat, creator of Senate Stock Watcher, and, later, House Stock Watcher.
This was in March 2020, when it first came to light that a handful of sitting senators had engaged in suspicious trading activity, and potentially insider trading, before the pandemic became an obvious concern in the U.S.
On the government websites where disclosures are shown, “This data is presented in a format that’s not easily consumable at all,” Carambat says. “It didn’t seem like there was a massively available tool for everyday people to look at and get some numbers.”
The reasons investors might want to have easy access to major financial moves made by their representatives are clear; it’s what sparked the STOCK Act to begin with, and an issue that took on newfound public importance in the wake of last year’s investigations.
David Kass, clinical professor of finance at the University of Maryland, Robert H. Smith School of Business, says, “Since members of Congress do have access to inside information such as the outlook for the overall economy, specific industries, and individual companies, large transactions on either the buy side or the sell side might serve as a useful signal as to major changes that could be forthcoming that could affect the securities involved.”
Of course, even large trades can be totally innocuous. Drawing conclusions without a fuller knowledge of an individual’s financial situation or their potential motivations would be premature.
Still, in the world of investing, more information is always better. What follows is a list of the most recent stock purchases or sales of more than $100,000 in the House and the Senate.
Some caveats: Due to the rules guiding financial disclosure reports, transactions don’t always necessarily represent the maneuverings of members of Congress themselves; they can also indicate buying or selling by a spouse, dependent, or a broker acting on their behalf or without their knowledge.
In addition, filings made on behalf of a Congress member can, in the House in particular, occasionally be filed by a representative’s office on one day and not show up on the Clerk’s website until slightly later, so any summaries of recent transactions always risk being incomplete.
All publicly available transactions below are reported as they appear in the correspondent public reports, unless otherwise noted.
With that in mind, here are some of the most recent Congressional stock trades of more than $100,000.
[READ: Investing In Stocks for Beginners.]
House of Representatives
Rep. Mark Green (R-TN). Rep. Green is one of the more active traders in Congress, according to recent filings.
His recent large trades are almost all concerned with midstream oil and gas players. Midstream companies store and transport fossil fuels making their way from the “upstream” producers to the “downstream” aspects of the industry like refining, marketing and distribution.
Shell Midstream Partners LP (ticker: SHLX). Green’s reported purchases total between $800,000 and $1.6 million in SHLX in three separate transactions between May 12 and May 27. Shell Midstream Partners is a $6 billion company based in Houston. SHLX pays a handsome 11.6% dividend.
PBF Logistics LP (PBFX). Rep. Green reported sales totaling between $1 and $2 million of PBFX in transactions on May 26 and May 27, after having purchased between $250,000 and $500,000 of it on May 12. The company’s market capitalization is $986 million. PBFX pays a 7.6% dividend and is based in Parsippany, New Jersey.
MPLX LP (MPLX). Green reported a sale between $500,000 and $1 million occurring on May 13. Worth more than $31 billion, MPLX pays a 9% dividend and is headquartered in Findlay, Ohio.
The representative has also reported hundreds of thousands of dollars in other stock transactions occurring since May 12, including Energy Transfer LP ( ET) (bought), EnLink Midstream LLC ( ENLC) (bought), Antero Midstream Corp. ( AM) (sold), Enable Midstream Partners LP ( ENBL) (sold), CrossAmerica Partners LP ( CAPL) (bought), and USA Compression Partners LP ( USAC) (sold, then bought the next day), according to filings.
Rep. Scott Franklin (R-FL). Representative Franklin’s trades aren’t as numerous as Rep. Green’s, but they are much larger in size. Franklin is a new member of Congress, elected in 2020 to Florida’s 15th congressional district.
BRP Group (BRP). One of Rep. Franklin’s most recent filings concerning a sale in BRP Group highlights another limitation of the current disclosure system. Several sales of BRP appear on the Clerk’s website for April 27, including one reporting a sale of more than $50 million in shares. BRP Group is a $2.7 billion insurance company based in Tampa, Florida.
Rep. Franklin’s office, responding to an inquiry on this reported sale, clarified that in fact another document, disclosing a sale between $1,000,001 and $5 million for the same date, was a corrected and accurate filing.
Rep. Franklin previously served as longtime CEO for insurance company Lanier Upshaw, which was acquired by BRP Group before Franklin was elected to Congress.
May 20 transactions. Each of the following sales were reported as occurring on May 20; the transactions were made across joint accounts, traditional accounts and individual retirement accounts, according to a U.S. House of Representatives transaction report.
AT&T (T). Rep. Franklin reported sales between $35 million and $100 million in AT&T stock in separate transactions. AT&T is a $209 billion telecom giant based in Dallas, Texas. The stock pays a 7.1% dividend.
Discover Financial Services (DFS). Rep. Franklin reported sales between $26 million and $55 million of DFS stock in separate transactions. DFS is a $37 billion credit card company based in Riverwoods, Illinois. Shares pay a 1.4% dividend.
Viatris (VTRS). Rep. Franklin reported sales between $2.1 million and $5.25 million in Viatris stock. Viatris is a $19 billion pharmaceutical company based in Canonsburg, Pennsylvania. VTRS has a 2.8% dividend yield.
[READ: 5 Stocks With Recent Dividend Increases.]
Senate
Sen. John Hickenlooper (D-CO). Both of the following transactions were filed by Sen. Hickenlooper’s spouse.
Chipotle Mexican Grill (CMG). Sen. Hickenlooper reported a sale between $100,001 and $250,000 in CMG stock that occurred on May 19. Chipotle is a $38 billion fast casual burrito and taco chain based in Newport Beach, California.
Qurate Retail Inc Series A (QRTEA). Sen. Hickenlooper reported a sale between $100,001 and $250,000 in QRTEA stock occurring on May 10. Qurate Retail sells consumer products via the internet, mobile devices and TV. It’s the parent company of QVC, is worth more than $5 billion and is based in Englewood, Colorado.
Sen. Ron Wyden (D-OR). All of the following were filed as transactions by Sen. Wyden’s spouse, occurring on April 6. They largely involved stocks related to the semiconductor industry.
Applied Materials (AMAT). Sen. Wyden reported a sale between $100,001 and $250,000 of AMAT stock. Applied Materials supplies specialized manufacturing equipment to semiconductor producers. It’s a $125 billion company based in Santa Clara, California.
KLA Corp. (KLAC). Sen. Wyden reported a sale between $100,001 and $250,000 of KLAC stock. KLA is a $49 billion company paying a 1.1% dividend. Like AMAT, KLAC also supplies the semiconductor industry, making quality control equipment. It’s based in Milpitas, California.
Broadcom (AVGO). Sen. Wyden reported a sale between $100,001 and $250,000 of AVGO stock. The San Jose, California-based Broadcom is one of the world’s leading semiconductor companies. The company pays a 3.1% dividend and is worth $192 billion.
Constellation Brands (STZ). Sen. Wyden reported a sale between $100,001 and $250,000 of STZ stock. Constellation Brands is one of the major producers of alcoholic beverages in the U.S., with brands like Corona and Modelo under its belt. The Victor, New York-based company is worth $45 billion and pays a 1.3% dividend.
Limits and Reminders
The STOCK Act made some much-needed changes in the financial disclosure system for sitting politicians, but it’s still imperfect. The effectiveness of checking Congressional stock trades is dramatically inhibited by the inability to easily search and sort transactions.
The trades above are merely a recent list of larger stock trades; hundreds of other Congressional trades didn’t make the cut — either because they weren’t stock transactions or were $100,000 or less. Among those were recent sales of Dogecoin and disclosures that appear to reveal patterns of day trading.
Much of the data may not indicate anything — members of Congress are welcome to trade freely within the bounds of the law, as their constituents do — but it’s still an important, if small, check on the people who represent everyday Americans.
“A lot of people want to use this data to vindicate something, or accuse somebody of something — I don’t want to do that with any of this data. I just want to make it readable for other people to consume,” says Carambat, whose sites, House Stock Watcher and Senate Stock Watcher, stand as some of the most accessible ways to keep tabs on Congressional financial activity.
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Tracking Congressional Stock Trades: What Are Congress Members Trading? originally appeared on usnews.com
