The Stop Trading on Congressional Knowledge (STOCK) Act was passed in 2012 and was aimed at preventing using non-public knowledge to obtain private profit and requiring U.S. politicians to disclose their trades and holdings.
Over the years, there have been multiple violations of this bill, usually by politicians who filed their trades after the 45-day mandated period. However, there have been cases of more serious offenses where it had been suggested that politicians used insider information to obtain unfair advantage and unlawful profit.
One of these is the example of Representative Mike Kelly and his wife, who in 2020 bought Cleveland-Cliffs (NYSE: CLF) stock based on insider information from Kelly, after which CLF stock rose by 300% in the next several months.
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And she is back at it again, with yet another $100,000 purchase of CLF shares, according to a filing on June 14.
Notably, this filing breached the STOCK Act as it was reported past the 45-day period.
Previous CLF stock purchase was left unpunished
A congressional ethics watchdog found “substantial reason to believe” that Rep. Mike Kelly’s wife, Victoria, used insider information from her husband to profit from a stock purchase, potentially violating federal law and House rules.
In April 2020, she bought CLF stock shortly at $4.70 for a total of $50,000 after Kelly learned confidential details about the company’s situation through his congressional duties.
The company had threatened to shut down a plant in Kelly’s district unless the Trump administration intervened, which it did following lobbying efforts, including from Kelly.
After CLF shares reached a valuation of $18.11 for a handsome profit of approximately $192,000.
The ethics office recommended subpoenas for the Kellys and others who declined to participate in the investigation. Kelly’s office defended the transparency of his finances and claimed the purchase supported local workers, but investigators found no public statements to support this and noted the purchase was unusual for Victoria Kelly.
The new purchase is yet to offer a return
Since the new purchase of CLF stock on March 28, its value has plummeted by more than 34%, and it has yet to offer a return.
Notably, what may spur its growth is the announcement of $575 million in total funding from the United States Department of Energy (DOE) to pursue two decarbonization investments at Middletown Works in Ohio and Butler Works in Pennsylvania.
Kelly’s purchase date of CLF stock comes just three days after the announcement, with CLF stock currently posting pre-market gains of 0.27%.
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