Congressional stock trading is a contentious topic. Even a relatively minor U.S. politician, for instance, has an informational edge over your average retail investor. More to the point, lawmakers regulate the very industries they invest in.
Unsurprisingly, this tends to manifest in the form of above-average returns for members of the House of Representatives or Senate. Being a member of a particular congressional committee or subcommittee can provide an even greater informational edge — and lawmakers, in general, don’t shy away from leveraging that information for their own personal financial gain.
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Stay up-to-date on the trading activity of US Senators. The signal triggers based on updates from the Senate disclosure reports, notifying you of their latest stock transactions.
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Finbold’s insider trading radar picked up a periodic transaction report from the Clerk of the House of Representatives back on May 24, 2024. It showed that Susie Lee, the Representative of Nevada’s 3rd congressional district, had invested in the stock of a German arms manufacturer.
Since the purchase, the stock has seen significant price appreciation — moreover, this particular trade is a neat illustration of the all ethical quandaries that surround congressional stock trading.
Congresswoman invests in Rheinmetall stock ahead of surge
The May 24 disclosure revealed that Lee had invested between $1,001 and $15,000 in Rheinmetall AG. To be more precise, the trade took place on March 5. This was the sole trade that the congresswoman disclosed in that particular filing.
Rheinmetall is the largest German arms manufacturer — and the 5th largest in Europe. It trades on the Frankfurt Stock Exchange under the ticker FRA: RHM. However, U.S. investors can gain access to it through American Depositary Receipts (ADRs), which represent shares of foreign companies and trade on U.S. markets in dollars.
In Rheinmetall’s case, we turn to the following ticker — OTCMKTS: RNMBY. Since the congresswoman’s purchase, the price of RNMBY has increased by 105.98%. In addition, RNMBY shares saw a 35.22% surge from February 12 to February 18.
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At press time on February 19, Rheinmetall ADRs were changing hands at a price of $194.71, marking a 56.68% gain since the start of the year.
Why Lee’s purchase of RNMBY is suspicious
Geopolitical tailwinds chiefly drove the surge in Rheinmetall’s stock price. Amidst global uncertainty, the European Union has put renewed focus on its defensive capabilities.
As the United States and Russia continue negations surrounding the Russia-Ukraine war (it should be noted, without the direct involvement of Ukraine itself), there have been renewed calls for NATO presence in post-war Ukraine as a security guarantee.
At the same time, the growing diplomatic rift between Europe and the U.S. has led to renewed enthusiasm for a European defensive posture that would be less reliant on overseas allies.
Even in the case of this rift subsiding, readers should remember President Trump’s longstanding request for higher European defense spending. Lastly, Rheinmetall stock could benefit greatly from the $700 billion aid package for Ukraine that is reportedly being put together by the EU.
So, why was Lee’s purchase, in particular, suspicious? It’s quite simple — the Representative is a sitting member of the House Committee on Appropriations, as well as the Subcommittee on Military Construction. Despite the cooling of transatlantic relations, actions on this front are still taken jointly — and Lee was well-positioned to have advance knowledge of these recent developments.
However, it’s important to note that Chris D’Aloia, speaking on behalf of Rep. Susie Lee, provided an exclusive statement to Finbold clarifying the situation.
“Representative Lee strongly supports a ban on Members of Congress directing trades of individual stocks. Representative Lee did not own this account and had no authority to direct any trades made — she had no knowledge of the trade as the account was managed by her ex-husband on behalf of their children, the sole beneficiaries of this account.” – Spokesperson for Rep. Susie Lee
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