At least nine members of Congress sold banking stocks before and during market turmoil last month, including a member of the House financial services committee who sold Silicon Valley Bank stock before it failed.
Josh Gottheimer, a New Jersey Democrat and a member of the financial services committee since 2019, disclosed the sale of shares in the California bank made on March 9, valued between $1,000 and $15,000, according to analysis of public disclosures of stock sales by Quiver Quantitative. SVB collapsed the next day, sending US banking stocks into a massive downward spiral.
He also reported sales made on March 6 and March 14 of shares in Charles Schwab worth a similar amount. Schwab’s stock is down nearly 30 per cent since March 7.
Gottheimer also reported the March 29 sale of a position in Seacoast Banking, a Florida bank caught up in the upheaval, whose share price has fallen a further 10 per cent since the sale.
The trades come as public advocacy groups question whether allowing government officials to own or trade stocks might present a conflict of interest with their official duties, even if they are required by law to disclose them.
Representatives for Gottheimer pointed to a statement from last year in which they said his financial decisions were made at the discretion of a third-party financial adviser.
“I don’t believe members of Congress, judges, or any government employee in a policy role, should be involved in the day-to-day trading of securities, including cryptocurrencies,” he said in the statement. A representative said he is in the process of setting up a blind trust.
According to Quiver data, Gottheimer’s filings make him one of the most active stock traders in the House of Representatives, with more than 380 trades last year.
Advocacy groups have argued that ownership of individual company shares presents a conflict of interest that erodes public confidence. “It highlights just exactly why public trust in our elected officials is so low,” said Danielle Caputo, legal counsel for ethics at the Campaign Legal Center, a campaign watchdog group.
“Whether or not you are specifically directing a specific trade under the current laws, it doesn’t matter. You are ultimately responsible for those trades, and that is why it is essential to prohibit members of congress from benefiting from trading single stocks.”
Gottheimer is among a number of members of Congress who sold shares in banks as turmoil gripped the sector last month.
Daniel Goldman, a House Democrat representing a district in New York, sold a Schwab position worth between $15,000 and $50,000 on March 6, and on March 15 sold shares in San Francisco-based First Republic Bank, which was battered by the fallout from SVB. First Republic shares are down by more than half since he sold.
Jared Moskowitz, a Democrat from Florida, reported selling a Seacoast position worth between $65,000 and $150,000 on March 10, the day its shares fell almost 20 per cent. The trades were made two days after he attended a congressional briefing on the banking crisis, and were first reported by the New York Times. A spokesperson for Moskowitz told the Times that the share sales were “suggested by the congressman’s financial adviser as a means to diversify his young children’s holdings.”
John Curtis, a Utah Republican, and Earl Blumenauer, an Oregon Democrat, also reported selling shares in First Republic on March 15 and 20, as 11 large banks were putting together plans to stabilise the lender with $30bn in additional deposits.
A representative for Goldman said: “Congressman Goldman is not involved in trading stocks in his portfolio, which is managed entirely by an investment adviser.” He is also in the process of setting up a blind trust.
Blumenauer and Curtis did not respond to requests for comment from the Financial Times.
While legislation to place limitations on congressional owning or trading in individual securities has stalled in recent years, some lawmakers say support is growing for an outright ban on the practice.
“Members of Congress are supposed to serve the American people, not their stock portfolios,” Sherrod Brown, a Democratic US senator from Ohio, said in a press release. He has introduced a bill, which has attracted 22 co-sponsors, that aims to restrict owning stocks, commodities, and futures by members of Congress.
Current rules allow members of Congress to wait up to 45 days to report their trades, so further transactions may yet emerge.