San Antonio Express-News (Sunday)
Dishing out shame for Texas members of Congress engaged in stock trading
I’m continuing to name and shame members of Congress from Texas who trade individual stocks — mostly because it’s such an obvious avenue for insider-type trading, either because of special access to information or through special regulatory duties, subpoena power or committee assignments.
It’s gross and it should be banned.
Almost all white-collar professionals subject themselves to conflict-of-interest rules that limit their investment behavior — lawyers, researchers, consultants, bankers, brokers, professors, and nonprofit board members and executives.
Not only do they want to ensure their professional decisions are not self-dealing, they also want to remove the possible perception that they are. Two regional presidents and one vice chairman of the Federal Reserve resigned from their jobs early last year after trading individual stocks — as they should have.
Perception matters as much as reality. We would expect the same or a higher standard from members of Congress, but in fact, there is no such standard. No law forbids a member of the Financial Services Committee from trading individual bank stocks, for example, which is absurd.
If you want to follow along congressional stock trading from home, I recommend the searchable database on capitoltrades.com.
In January 2022 it looked like we had momentum toward banning individual stock trading by members of Congress, as longtime holdout and thenHouse Speaker Nancy Pelosi finally agreed to bring a bill to that effect. Alas, the clock ran out on her speakership. Newly elected House Speaker Kevin McCarthy previously promised to ban congressional stock trading, so with hope eternal and a burst of optimism, I will continue to raise the issue.
(Side note: I’ll bet that McCarthy is gone as house speaker before he passes a bill to ban congressional trading of individual stocks.)
Rep. Michael McCaul, RAustin, is by far the most active stock-trading member of Congress in Texas, as well as the most active stock trader in the United States in 2022, according to financial site Unusual Whales.
Throughout 2022, McCaul reported about 100 stock transactions per month, totaling millions of dollars, for an estimated annual total of $176 million in share value. His family’s fortune — derived from his marriage to the daughter of the founder of Clear Channel Communications — was estimated in 2011 at just under $300 million.
He continued reporting this stock-trading pace in November and December, with 84 and 126 trades, respectively.
If McCaul had clear conflicts of interest in his trading, it would be hard to discern amid all of the noise of his transactions. But he shouldn’t make us doubt him. His family forbuying
tune should be invested in a blind trust.
Rep. Patrick Fallon’s, RNorth Texas, individual 2022 stock trading involved buying shares of Twitter in January 2022 and then selling those shares as part of the company’s going-private transaction at the end of October 2022. In the six months between the Elon Musk-announced intention to acquire Twitter and the close of the transaction, various branches of the federal government investigated Twitter, including the Securities and Exchange Commission and Federal Trade Commission.
Whistleblower Peiter Zatko, former chief technologist for Twitter, testified before the Senate Judiciary Committee in September 2022. It’s just this sort of regulatory power and interaction that should make individual stock trading by members of Congress forbidden. Incidentally, Unusual Whales reports that Fallon’s Twitter trade gave him the best performing results of any mem
ber of Congress in 2022, beating the S&P 500 by 51.6 percent.
Rep. Michael Burgess, RDenton, continued to pursue a combination of stock trades and option trades. He sold up to $50,000 of Morgan Stanley shares. In November, he also pursued a buy and call-write strategy on Disney, meaning he bought up to $50,000 of shares, then sold a one-month call option on up to $15,000 of Disney. Three times he also sold up to $15,000 of one-month calls on medical devices company Stryker, a stock he actively traded earlier in the year.
Please don’t try this buy and call-write strategy at home, not because it’s so clever and complicated but rather because it’s just not a good personal finance practice. Whichever broker sold him on this idea is making money, though I doubt Burgess will do so using this strategy in the long run. I’m embarrassed for him.
Rep. Lloyd Doggett, D-Austin, continued the programmatic trading he’s done all year,
a limited list of repeating large-cap retail names in $1,000 to $5,000 increments each month: Home Depot, IBM, Johnson & Johnson, PPG Industries and Coca Cola.
Rep. Dan Crenshaw, R-Harris County, had the most notable cowboy-trading style of all Texas representatives in 2022, buying and selling in short time frames and preferring turbocharged tech stocks and a threetimes levered bank-shares exchange-traded fund called Direxion Financial Bull. He bought shares in that ETF again in October, as well as tech companies Amazon, Apple, Meta and Google; Wynn, the casino company; and an oil ETF, in sizes ranging from $1,000 to $15,000. It’s all very on-brand for him, and a casino company is the cherry on top. Giddy-up, Dan.
Rep. Van Taylor, R-Plano, was not up for re-election in 2022, so his stock sales and disclosures occurred after the November election, and when he was scheduled to leave office.
He reported sales of up to $10 million in oil and gas companies Exxon and Occidental Petroleum, and up to $250,000 of Bristol Myers Squibb and $500,000 of Moodys, as well as smaller positions in Eli Lilly and Santos.
I mostly mention Taylor for two noteworthy facts. Although we are not related and I don’t recall ever speaking directly with him, I did go to college with him, and we shared a government class for one semester.
After serving two terms in office in March 2022, he declined to continue in his Republican primary runoff. Taylor admitted to an affair with Tania Joya, the “ISIS Bride,” sonamed because she had previously been married to American-born jihadist John Georgelas, who joined the Islamic
State.
Joya claimed the affair with Taylor lasted nine months after they met during a “deprogramming” session for jihadists and that she had received from Taylor at least $5,000 to pay off her credit card bills. Taylor apologized to his family, served out his term, and sold lots of public company shares in November after the election. Based on his stock trading disclosures, he won’t be short for money in retirement from Congress.
And finally, Rep. Vicente Gonzalez, D-McAllen, traded earlier in 2022, but he has not done so since I last wrote about this topic in October. Good job, Vicente.
Meanwhile, Rep. Pete Sessions, R-Waco, only traded U.S. Treasury bonds since October, a security I don’t consider subject to insider trading — unless we get further into the congressionally created fake crisis of the debt ceiling.