Congressman discloses $175 million in trades 580 days late, gets off with $200 fine

It is particularly unsavory when lawmakers are the ones to violate the law, and the latest example of such activity simultaneously reinforces the notion that a monetary fine simply means ‘legal for the rich.’

To be precise, Representative Darrell Issa of California reported seven different bond sales on September 25. The most recent took place on May 2, 2023, and the oldest on February 9 of the same year.

The distance between the trades and the reporting means that Issa was late by approximately 500 days with his filings. Under the ‘STOCKS Act,’ U.S. Representatives have 45 days to report their trades.

What makes the situation worse is that first-time offenders generally have to pay only a $200 fine for their lack of transparency. Given that Representative Issa sold up to $175 million worth of bonds, he is not likely to lose much sleep over the penalty.

Was the ‘STOCKS Act’ dead on arrival?

Representative Issa’s bond sales also showcase another deficiency of the ‘STOCKS Act,’ as it is, in fact, impossible to accurately quantify his trades.

Indeed, the law only requires politicians to report the ranges their trades fall into. Such a setup is adequate for small buys or sells, as, for example, one of the possible filing ranges is $1,001 to $5,000.

However, the ranges are scaled up in a way that vastly diminishes transparency on large trades. For example, if a Member of Congress traded $6 million worth of shares, they would report it as between $5 and $25 million.

For context, the $20 million area of uncertainty is more than ten times greater than what the average American worker makes throughout their entire career.

The situation only gets worse with larger sums. For example, a $30 million trade would be reported as between $25 and $50 million, and subsequent gaps only become greater.

Each of Issa’s seven sales was reported as between $5 and $25 million, making it exceptionally hard to tell if he offloaded $35 million worth of bonds or $175 million – a $140 million gap.

Why the lack of transparency is a problem

The large reporting gaps serve to undermine the transparency supposedly provided by the ‘STOCKS Act.’ They make relatively trivial pursuits – such as estimating a politician’s net worth – difficult, but can also cause greater issues.

Though it is arguably unsavory for any politician to invest in a company they oversee, there is a major difference between the conflict of interest that arises from a $5 million investment made by a Congressperson sitting on a relevant Committee and a $25 million investment.

Such concerns have become increasingly pointed in recent months as the U.S. has been shaken by a string of corruption scandals. The latest potentate to fall is Eric Adams, the soon-to-be former Mayor of New York.

U.S. politicians regularly trade with conflicts of interest

Finally, the issues of potential conflict of interest received another example as recently as August 9, with Representative Debbie Wasserman-Schultz’s investment in an obscure mining stock called Hecla Mining Company (NYSE: HL).

Though the trade was relatively small, its timing is, for several reasons, suspicious and potentially indicative of Congressional insider trading.

Wasserman-Schultz sits on the Subcommittee on Environment, Manufacturing, and Critical Minerals, meaning she could have been privy to non-public information about Hecla.

Such a notion is lent additional credence by the fact that the stock has rallied more than 30% following the purchase.