In buying stocks, CT lawmakers like blue chips and mutual funds
Washington – When it comes to recent stock picks, Rep. John Larson liked JPMorgan Chase, Disney and General Electric and has sold holdings in Occidental Petroleum, United Technologies and financial services giant HSBC Holdings.
The STOCK Act, a bill signed into law by President Obama in 2012, has opened the door a bit wider on the financial dealings of members of Congress by requiring them to file timely reports on the purchase or sale of stock valued at $1,000 or more.
STOCK is an acronym for “Stop Trading on Congressional Knowledge.”
The law was approved by Congress to tamp down public furor after a 60 Minutes report alleged that House Minority Leader Nancy Pelosi, D-Calif.; House Speaker John Boehner, R-Ohio; and other lawmakers made investment decisions based on information available to them as members of Congress but unavailable to the public. The lawmakers denied the allegations.
Dan Auble, a senior researcher at the Center for Responsive Politics, says the STOCK Act may not have ended insider trading in the U.S government, but “it allows you to find out about conflicts in a much more timely fashion.”
Before the STOCK Act, lawmakers reported their financial holdings and stock trades once a year in a filing made available to the public every June. So a trade could be kept out of the public eye for as long as 18 months. Now they are required to be disclosed within 45 days.
Still, Auble says, there needs to be more disclosure.
Like the financial disclosure reports, the stock-trading filing, called a “periodic transactions report,” describes the values of equities purchased or sold within broad categories: from $1,000 to $15,000; $15,001 to $50,000, etc. — all the way to “over $50 million.”
“A more exact estimate of the value would be helpful,” Auble said.
Lawmakers also do not have to make periodic reports on the sale of widely held investments, like mutual funds. Periodic transaction reports filed by members of Connecticut’s congressional delegation since Jan. 1, 2014, show Larson was the most active, making nearly 50 trades.
Larson press secretary Amanda Schoen said a financial adviser did the trading. “The financial adviser has the authority to make the day-to-day transactions,” Schoen said.
Among his typical trades, Larson, a member of the House Ways and Means Committee, purchased between $1,000 and $15,000 worth of shares of stock in the Walt Disney Company, Costco, Colgate-Palmolive, Microsoft, MasterCard, Nike and several other companies. Larson also briefly held shares of Apple and Starbucks.
Most of Larson’s holdings have had modest gains as the stock market has reached record highs this year. He sold his United Technologies stock on March 5, 2014, when it was trading near a high for the year.
Sold on Blue Chips
Rep. Jim Himes, D-4th District, reported selling between $1,000 and $15,000 worth of shares in OHA Investment Corp., a firm that says it specializes, among other things, in high-yield bonds, leveraged loans and distressed investments. Himes, considered one of Congress’s masters at social media, raised eyebrows when he sold between $50,000 and $100,000 worth of Facebook stock in 2013. The stock is worth about 50 percent more today.
Sen. Richard Blumenthal, D-Conn., reported that his wife Cynthia purchased between $100,000 and $250,000 in shares of the ESO Special Opportunities Fund, a European investment fund hat says it specializes in “undervalued and distressed assets.” She also purchased between $1.5 million and $6 million in shares of Kinrose Fund L.P.
The Center for Responsive Politics analyzed the stock holdings of members of Congress in 2013 and determined “just like many Americans, our elected officials like to play it safe with their investments, betting largely on blue chip companies across diverse industry groups.”
The 10 most popular companies were: General Electric, Procter & Gamble, Microsoft, Wells Fargo, Apple, Bank of America, AT&T, Exxon Mobil, JPMorgan Chase and Verizon.
But disclosure filings show most Connecticut lawmakers, including Reps. Joe Courtney, D-3rd District; Rosa DeLauro, D-2nd District; and Elizabeth Esty, D-5th District; report owning few or no individual stocks and prefer to make investments in mutual funds, index funds and real estate.
The financial disclosure form for Blumenthal and fellow Connecticut Democrat Sen. Chris Murphy are not yet available. Murphy, considered one of the least affluent members of the Senate, was granted a two-week extension.
“Senator Murphy requested a two-week extension to make sure the information on his financial disclosure form was both complete and accurate,” said Murphy spokesman Chris Harris.
Blumenthal, one of the wealthiest members of Congress who files voluminous reports, was granted a 90-day extension and won’t file his report until August.
A more up-to-date and complete picture of the delegation’s financial holdings will be available next month when the disclosure forms for 2014 are released.
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