We caught 4 members of the House Ethics Committee violating the STOCK Act

Update on Senator Tina Smith’s Trading

Two weeks ago, we reported on suspicious trading by Senator Tina Smith (D-MN) in TCMD, a small-cap medical device company based in her home state.

TCMD has now risen 33% since Smith’s made her large purchase, and 5% since we sent our last newsletter on November 20. Smith has also seen a 32% return from a trade in AORT (another healthcare company), which occurred around the same time.

We still have not seen any significant mainstream media coverage of these trades, despite their unusual nature and Tina Smith’s massive profit thus far.

Over the last 3 weeks, our Congress Buys Strategy has risen by another 6%. Click the button below to sign up for Quiver and start copytrading Congress:

We caught 4 members of the House Ethics Committee violating the STOCK Act

The 2012 STOCK Act was intended to combat insider trading by politicians. While it doesn’t ban trading by members of Congress, it is meant to give closer oversight, and provides regulations for how trades must be reported.

The House Ethics Committee is in charge of enforcing the STOCK Act, and penalizing members of Congress who fail to meet disclosure requirements. However, despite frequent violations, they rarely assess any penalties — and Ethics Committee members often break the law themselves.

We recently investigated this closer, and found 4 members of the current Ethics Committee who have violated the STOCK Act:

John Rutherford: 152 violations

Rep. John Rutherford (R-FL) has been the most egregious offender, with over 150 trades that have violated the STOCK Act. Many of these happened in 2017, where he made a flurry of trades in July and then waited over a year to disclose them.

The STOCK Act requires members of Congress to file transaction disclosures within 45 days of making a trade, however (as seen here) this rule is often violated with no penalty.

David Joyce: 136 violations

Rep. David Joyce (R-OH) is close behind Rutherford, with at least 136 violations of the STOCK Act. Around half of these violations occurred in 2019, and the most recent was a 2020 sale of IWM that he waited over a year to disclose.

Notably, he has had 7 trades where he waited over 2 years (a full election cycle) before reporting.

Michael Guest (Committee Chairman): 2 violations

Despite being the chairman of the House Ethics Committee, Rep. Michael Gust (R-MS) is also one of Congress’s most active traders. He has traded over $500,000 in stocks and options so far this year, and has violated the STOCK Act at least twice during his time in Congress.

In January 2021, he made two trades in energy companies (Exxon and BP), and waited until November to report them (well past the 45 day reporting period).

Deborah Ross: 1 violation

Rep. Deborah Ross (D-NC) has also violated the STOCK Act, with a November 2022 exchange for Unity Software ($U) that she waited over 6 months to disclose.

Conclusion

Keep in mind that this is not necessarily a full list of STOCK Act violations for these members, and there may be other committee members who are culpable as well.

Due to the practically nonexistent enforcement of the STOCK Act, it’s entirely possible that some members have completely foregone reporting trades (instead of reporting them late).

You can follow us on Twitter for more insights from Congressional Trading data, and updates on the push towards better regulation and transparency.

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