Beijing, 4 Apr (Xinhua) -- According to a report by the Financial Times on 24 April, at least nine US congressmen sold stocks before the "thunderstorm" in the banking industry last month and during market turmoil.
One of them is Josh Gottheimer, a Democrat who entered the House Financial Institutions Committee in 2019. Data from the US stock trading information analysis agency "Flutter Quantitative" showed that Gottheimer sold Silicon Valley Bank shares on March 3.
A day later, Silicon Valley banks were shut down, triggering a collective "dive" in U.S. banking stocks.
Gottheimer also reportedly sold Schwab shares on March 3 and March 6. Schwab shares have fallen nearly 3 percent since March 14. On March 3, he sold his position in Florida Coast Bank, which had been frustrated by industry turmoil, and its shares fell a further 7 percent after Gottheimer's trade.
According to "Flutter Quantitative," Gottheimer is one of the most active federal House members of the House of Representatives, closing more than 380 trades last year.
In addition to Gottheimer, Democratic U.S. Representative Daniel Goldman sold Schwab Group on March 3 and sold First Republic Bank shares on March 6.
First Republic Bank shares "evaporated" by more than half after Goldman's sell-off. First Republic Bank last month broke out serious liquidity problems, 11 major banks injected $300 billion into it, and S&P Global downgraded the bank's credit rating to junk status. Republican U.S. Representative John Curtis and Democratic U.S. Rep. Earl Bloomnorr also sold shares in the bank on March 3 and March 15.
Separately, Democratic U.S. Representative Jared Moskowitz sold his Florida Coast Bank position on March 3, and the bank's share price fell nearly 10% on the day. The deal came two days after Moskowitz attended a parliamentary briefing on the banking crisis. A spokesman for Moskovitz argued that a financial adviser suggested selling positions "to diversify his children's assets."
The Financial Times said that under current U.S. regulations, members of Congress can disclose relevant information up to 45 days after the completion of stock transactions, which means that more transactions may not be known.
According to reports, US nonprofit organizations have been critical of allowing public officials to speculate in stocks, believing that it may constitute a conflict of interest with their public office.
Danielle Caputo, legal counsel for ethics at the U.S. Campaign Law Center, said the lawmakers' actions "illustrate why public trust in our elected officials is so low."
"Capitol Hill stock gods" are not unique. According to an investigation by the New York Times last year, from 2019 to 2021, at least 97 US congressmen were suspected of insider trading, accounting for about one-fifth of the total number of members of Congress, including 49 Republicans, 47 Democrats and 1 independent congressman. The return on investment of then-House Speaker Nancy Pelosi and her husband even exceeded that of the well-known investor Warren Buffett.
There are also many government officials and federal judges who speculate in stocks. Two previous surveys by The Wall Street Journal showed that thousands of U.S. administrative officials reported that stocks they owned or traded rose or fell as a result of their institutions' decisions. From 2010 to 2018, 131 federal judges heard cases involving businesses owned by themselves or their families without recusal. (Marine)