Six Takeaways From WSJ’s Investigation Into the Stock Trades of Government Officials.
A Wall Street Journal investigation revealed that thousands of officials across the U.S. government’s executive branch disclosed owning or trading stocks that stood to rise or fall with decisions their agencies made.
Across 50 federal agencies ranging from the Commerce Department to the Treasury Department, more than 2,600 officials reported stock investments in companies while those companies were lobbying their agencies for favorable policies, during both Republican and Democratic administrations. When the financial holdings caused a conflict, the agencies sometimes simply waived the rules.
The Office of Government Ethics, which oversees the conflict-of-interest rules across the executive branch, is “committed to transparency and citizen oversight of government,” said a spokeswoman.
Among the findings of the investigation, which is the most comprehensive analysis of stock trading by officials in the executive branch of the government:
Numerous federal officials owned shares of companies lobbying their agencies:
More than 200 senior officials at the Environmental Protection Agency, or nearly one in three, reported that they or their family members held investments in companies that were lobbying the agency. EPA employees and their family members collectively owned between $400,000 and nearly $2 million in shares of oil and gas companies on average each year between 2016 and 2021.
Issues emerged at a wide array of agencies:
At the Defense Department, officials in the office of the secretary or their family members collectively owned between $1.2 million and $3.4 million of stock in aerospace and defense companies, on average, during years the Journal examined. Some owned stock in Chinese companies while the U.S. considered blacklisting the companies.
An EPA official reported purchases of oil and gas stocks. The Food and Drug Administration improperly let an official own dozens of food and drug stocks on its no-buy list. A Defense Department official bought stock in a defense company five times before it won new business from the Pentagon.
Some officials traded ahead of regulatory actions:
More than five dozen officials at five agencies reported trading stocks of companies shortly before their departments announced enforcement actions against those companies, such as charges or settlements.
Federal officials are big technology investors:
While the government was ramping up scrutiny of large technology companies, more than 1,800 federal officials reported owning or trading at least one of four major tech stocks: Meta Platforms Inc.’s Facebook, Alphabet Inc.’s Google, Apple Inc. and
Amazon.com Inc.
Some officials made large and risky trades:
About 70 federal officials or their family members reported using sophisticated techniques such as options trading and short selling, with some individual trades of between $5 million and $25 million. In all, the disclosure forms revealed more than 90,000 stock trades during the six-year period reviewed.
The husband of a Commodity Futures Trading Commission economist in a single year shorted nearly 3,000 stocks, betting on a drop in their price. Such trading is contrary to CFTC rules, but the agency waived them, fearing it could be sued.
The scope of the investigation was extensive:
The Journal obtained and analyzed more than 31,000 financial-disclosure forms for about 12,000 senior career employees, political staff and presidential appointees. The review spans 2016 through 2021 and includes data on about 850,000 financial assets and more than 315,000 trades reported in stocks, bonds and funds by the officials, their spouses or dependent children.
The federal government doesn’t maintain a comprehensive public database of the mandatory financial disclosures of all senior executive-branch officials. The Journal built its own.