Slaughter to Introduce Bill to Close Ethics Loopholes and Strengthen the STOCK Act
WASHINGTON, DC — Congresswoman Louise Slaughter (NY-25) announced today that she will be introducing legislation to strengthen the STOCK Act and close ethics loopholes, which have been taken advantage of by members of Congress to purchase exclusive stock deals not available to the general public and take part in initial public offerings (IPOs) outside the United States. The End Congressional Stock Market Abuse Act would prohibit members from taking part in foreign IPOs, purchasing stock at discounted prices, selling stock at higher than market value, or from participating in private placement stock offerings. This strengthening of the STOCK Act follows controversial trading by Congressman Chris Collins (NY-27) and now Secretary of Health and Human Services Tom Price, which have already raised serious questions about violations of STOCK Act insider trading prohibitions.
“I introduced the STOCK Act and worked for years to get it signed into law so the American people could trust that members of Congress weren’t using their position for personal profit. It is a major violation of the public trust for members to use a legal loophole to get around this law and enrich themselves. The legislation I’m introducing will make it clear as day that federal officials who take part in exclusive stock deals not available to the general public are breaking both the spirit and the letter of the law,” said Slaughter. “Oversight of the STOCK Act is one of my top priorities and I will continue taking action if any member of Congress tries to find a new way around this law.”
Slaughter first introduced the STOCK Act in 2006. After her six year fight and a groundswell of public support following a 60 Minutes investigation, the legislation was passed and signed into law on April 4, 2012. The bill prohibits insider trading by members of Congress, their staff, and other government employees and requires groundbreaking new disclosures that shine a light into the trading habits of public officials. The law is intended to bar members of Congress from taking part in IPOs not available to the general public regardless of the location of the company.
However, it does not expressly prohibit members of Congress from trading securities at discounted prices not widely available to the public, which Congressman Collins and now Secretary of Health and Human Services Tom Price were recently discovered to have done in 2016. Through questionable trades made in 2013, Collins also found a legal loophole in the law and took part in a foreign IPO, which the STOCK Act was designed to prohibit. Slaughter’s bill would close this loophole.
Australian pharmaceutical company Innate Immunotherapeutics, Ltd. conducted an IPO on the Australian Stock Exchange in 2013. Congressman Collins, who is the company’s largest shareholder and serves on its board by utilizing another loophole in House ethics rules, bought $2.2 million worth of stock in that IPO but did not signify that the purchase was an IPO in filings to the House Ethics Committee that are required under the STOCK Act.
In addition, Innate Immunotherapeutics held a private placement offering in August 2016. Collins, along with then-Rep. Tom Price, participated in that offering. Collins alone purchased four million shares priced below market value.
The 21st Century Cures Act was within the jurisdiction of the House Energy and Commerce Committee, on which Collins serves on its Health Subcommittee. It was later passed by Congress and signed into law in December, and the stock of Innate Immunotherapeutics tripled.
According to reports, Collins recently made a series of questionable statements suggesting he may have also given stock advice to numerous people. Reporters recently overheard Collins in the Speaker’s lobby asking, “Do you know how many millionaires I’ve made in Buffalo the past few months?” This week, it was reported that four additional members of Congress – Congressman Conaway, Congressman Long, Congressman Lamborn, and Congressman Mullin – made purchases in Innate Immunotherapeutics.
Slaughter was the first member of Congress to call on the Securities and Exchange Commission (SEC) to conduct a complete investigation into questionable stock trades by Collins and Health and Human Services Secretary Tom Price when he was a member of the House of Representatives. Filings required under the STOCK Act show that while serving in Congress, Sec. Price made hundreds of stock trades since those disclosures first became mandatory in 2012, including reported transactions involving stocks of 40 different companies in the health care sector. As former chairman of House Budget Committee and member of the House Ways and Means Subcommittee on Health, Sec. Price was privy to information not available to the public.
In letters to the SEC, Slaughter highlighted the fact that these trades by Collins and Price were made and often timed to achieve significant earnings or avoid losses, drawing into question whether these transactions were triggered by insider knowledge.
Earlier this month, Slaughter pushed U.S. Attorney General Jeff Sessions for answers regarding the firing of former U.S. Attorney for the Southern District of New York Preet Bharara. Recent reports suggest President Trump reversed course and fired Bharara, who was reportedly overseeing an investigation into the questionable stock trades by Secretary Price. Slaughter also separately asked Acting U.S. Attorney for the Southern District of New York Joon Kim to continue any investigation already underway until all the facts are uncovered.