UNETHICAL, IMMORAL, NOT ILLEGAL
As Fears of Banking Crisis Surged, Members of Congress Sold Bank SharesThe flurry of transactions highlighted how members of Congress continue to buy and sell stocks in industries that intersect with their official duties.
An account belonging to Representative Jared Moskowitz’s children sold shares of Seacoast Banking Corporation as fears of a banking crisis rattled investors.
Credit...Cliff Owen/Associated Press
By Kate Kelly
April 19, 2023
WASHINGTON — On March 10, as fears were swirling over the health of the nation’s banks, an investment account belonging to the children of Representative Jared Moskowitz, Democrat of Florida, sold shares of Seacoast Banking Corporation worth $65,000 to $150,000.
Two days later, with the government working to control the crisis, Mr. Moskowitz said in a television interview that he had attended a bipartisan congressional briefing on the tumult. And on March 13, as investors fretted over the failure of Silicon Valley Bank and two other, smaller banks, Seacoast Banking shares fell nearly 20 percent.
A spokesman for Mr. Moskowitz said in an email that the Seacoast share sales had been suggested by the congressman’s financial adviser as a means to diversify his young children’s holdings. Mr. Moskowitz said the congressional briefing on the bank crisis had taken place just before the television interview and after the shares were sold.
But the transaction was just one example of how members of Congress continue to buy and sell stocks and other financial assets in industries that intersect with their official duties.
At least eight members of Congress or their close relatives sold shares of bank stocks in March, according to an analysis by Capitol Trades, a project of the data firm 2iQ — a number that could rise in the coming days, as lawmakers make additional disclosures of trades made last month.
Though broadly legal, stock trading by members of Congress has become a flashpoint because lawmakers are sometimes privy to closely held information about the companies and industries they oversee.
A New York Times investigation last year showed that during a three-year period, nearly a fifth of federal lawmakers or their immediate family members had bought or sold stocks or other securities that could have been affected by their legislative work.
Efforts to pass legislation to place limits on trading by members of Congress or to ban it have stalled in recent years. On Capitol Hill on Tuesday, Senator Jeff Merkley, Democrat of Oregon, and Senator Sherrod Brown, Democrat of Ohio, announced a new bill intended to eliminate the practice that has 19 co-sponsors in the Senate.
A House version of the bill is co-sponsored by Representative Michael Cloud, Republican of Texas, and Representative Raja Krishnamoorthi, Democrat of Illinois.
“As the Silicon Valley Bank was closed, even during that period, there were reports that members of Congress were trading bank stocks,” Mr. Brown said. “I mean, imagine that — that members of Congress, we have more inside information,” he said, adding, “members of Congress are able, because of our jobs, to know more about the economy.”
Representative Dan Goldman, a New York Democrat, sold shares of First Republic Bank, the large depositor that was rapidly losing both cash and clients, on March 15, the day before it received an industry bailout of $30 million.
The wife and children of Representative Ro Khanna, Democrat of California, sold First Republic shares that same day. Representative John Curtis, Republican of Utah, sold shares in First Republic from a joint account with his spouse on March 16, the day the industry bailout occurred.
By that time, First Republic shares had already fallen nearly 80 percent from a February peak. The timing of the sales by those three lawmakers or their relatives meant that the sellers averted an additional price swoon that was still to come. First Republic stock is now down nearly 90 percent since the beginning of this year.
A spokesman for Mr. Goldman has said that his portfolio is managed by a third party without his knowledge and that he is setting up a blind trust to avoid any appearance of a conflict of interest. Mr. Khanna has said that his filings relate to trades made by a diversified trust belonging to his wife and young children and that he has no involvement in it. Spokesmen for Mr. Curtis did not respond to requests for comment.
Some members were also buying bank shares during the volatility. On March 17, Representative Nicole Malliotakis, Republican of New York, bought shares of New York Community Bancorp after private discussions with New York State bank regulators. Her transaction was first reported by The Wall Street Journal.
Two days later, New York Community Bancorp bought assets belonging to the failed Signature Bank — a deal that prompted its biggest share rally ever. Around that same time, other lawmakers, including Senator Gary Peters, Democrat of Michigan, and family members of Mr. Khanna, bought shares in larger U.S. banks, like Truist Financial. Mr. Goldman, among other transactions, made a series of purchases of shares in foreign banks, like Lloyds Banking Group and Mizuho Financial Group.
A spokeswoman for Ms. Malliotakis said that her financial adviser had recommended the purchase and that it amounted to less than $5,000 in value. A spokesman for Mr. Peters did not respond to questions about the transaction.
Kate Kelly covers money, influence, and policy as a correspondent in the Washington bureau of the Times. Before that, she spent twenty years covering Wall Street deals, key players and their intersection with politics. She is the author of three books, including "The Education of Brett Kavanaugh." More about Kate Kelly
By Kate Kelly
April 19, 2023
WASHINGTON — On March 10, as fears were swirling over the health of the nation’s banks, an investment account belonging to the children of Representative Jared Moskowitz, Democrat of Florida, sold shares of Seacoast Banking Corporation worth $65,000 to $150,000.
Two days later, with the government working to control the crisis, Mr. Moskowitz said in a television interview that he had attended a bipartisan congressional briefing on the tumult. And on March 13, as investors fretted over the failure of Silicon Valley Bank and two other, smaller banks, Seacoast Banking shares fell nearly 20 percent.
A spokesman for Mr. Moskowitz said in an email that the Seacoast share sales had been suggested by the congressman’s financial adviser as a means to diversify his young children’s holdings. Mr. Moskowitz said the congressional briefing on the bank crisis had taken place just before the television interview and after the shares were sold.
But the transaction was just one example of how members of Congress continue to buy and sell stocks and other financial assets in industries that intersect with their official duties.
At least eight members of Congress or their close relatives sold shares of bank stocks in March, according to an analysis by Capitol Trades, a project of the data firm 2iQ — a number that could rise in the coming days, as lawmakers make additional disclosures of trades made last month.
Though broadly legal, stock trading by members of Congress has become a flashpoint because lawmakers are sometimes privy to closely held information about the companies and industries they oversee.
A New York Times investigation last year showed that during a three-year period, nearly a fifth of federal lawmakers or their immediate family members had bought or sold stocks or other securities that could have been affected by their legislative work.
Efforts to pass legislation to place limits on trading by members of Congress or to ban it have stalled in recent years. On Capitol Hill on Tuesday, Senator Jeff Merkley, Democrat of Oregon, and Senator Sherrod Brown, Democrat of Ohio, announced a new bill intended to eliminate the practice that has 19 co-sponsors in the Senate.
A House version of the bill is co-sponsored by Representative Michael Cloud, Republican of Texas, and Representative Raja Krishnamoorthi, Democrat of Illinois.
“As the Silicon Valley Bank was closed, even during that period, there were reports that members of Congress were trading bank stocks,” Mr. Brown said. “I mean, imagine that — that members of Congress, we have more inside information,” he said, adding, “members of Congress are able, because of our jobs, to know more about the economy.”
Representative Dan Goldman, a New York Democrat, sold shares of First Republic Bank, the large depositor that was rapidly losing both cash and clients, on March 15, the day before it received an industry bailout of $30 million.
The wife and children of Representative Ro Khanna, Democrat of California, sold First Republic shares that same day. Representative John Curtis, Republican of Utah, sold shares in First Republic from a joint account with his spouse on March 16, the day the industry bailout occurred.
By that time, First Republic shares had already fallen nearly 80 percent from a February peak. The timing of the sales by those three lawmakers or their relatives meant that the sellers averted an additional price swoon that was still to come. First Republic stock is now down nearly 90 percent since the beginning of this year.
A spokesman for Mr. Goldman has said that his portfolio is managed by a third party without his knowledge and that he is setting up a blind trust to avoid any appearance of a conflict of interest. Mr. Khanna has said that his filings relate to trades made by a diversified trust belonging to his wife and young children and that he has no involvement in it. Spokesmen for Mr. Curtis did not respond to requests for comment.
Some members were also buying bank shares during the volatility. On March 17, Representative Nicole Malliotakis, Republican of New York, bought shares of New York Community Bancorp after private discussions with New York State bank regulators. Her transaction was first reported by The Wall Street Journal.
Two days later, New York Community Bancorp bought assets belonging to the failed Signature Bank — a deal that prompted its biggest share rally ever. Around that same time, other lawmakers, including Senator Gary Peters, Democrat of Michigan, and family members of Mr. Khanna, bought shares in larger U.S. banks, like Truist Financial. Mr. Goldman, among other transactions, made a series of purchases of shares in foreign banks, like Lloyds Banking Group and Mizuho Financial Group.
A spokeswoman for Ms. Malliotakis said that her financial adviser had recommended the purchase and that it amounted to less than $5,000 in value. A spokesman for Mr. Peters did not respond to questions about the transaction.
Kate Kelly covers money, influence, and policy as a correspondent in the Washington bureau of the Times. Before that, she spent twenty years covering Wall Street deals, key players and their intersection with politics. She is the author of three books, including "The Education of Brett Kavanaugh." More about Kate Kelly
A version of this article appears in print on April 20, 2023, Section A, Page 17 of the New York edition with the headline: As Lawmakers Fretted Over Banking Turmoil, They Also Shed Shares.
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