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An investigation of public financial disclosures revealed that more than 2,600 executive branch officials invested in stocks of companies their agencies oversaw from 2016 to 2021, the Wall Street Journal reported on Tuesday.

The activity included an official at the Environmental Protection Agency who invested in oil and gas stocks, a Food and Drug Administration employee who was allowed to own forbidden food and drug stocks, and a Defense Department official who bought stock in a company before it inked a deal with the Pentagon.

The Journal reported that most of the disclosure documents were not online or easily accessible. "The review amounts to the most comprehensive analysis of investments held by executive-branch officials, who have wide but largely unseen influence over public policy," the publication said.

The 2,600 officials serving both Republican and Democratic administrations adds up to more than one in five senior employees among 50 agencies who engaged in the practice.

Congressional Trading Already In Spotlight

In recent years, the legislative branch has been under scrutiny for trading stocks in companies where lawmakers or their staff members might have some inside knowledge about the companies or legislation involving them. 

The rules for buying and selling stocks were strengthened for Congress in 2012 by the Stop Trading on Congresssional Knowlege Act.  

And the debate about congressional members trading stocks continues to persist. The Bipartisan Ban on Congressional Stock Ownership Act of 2022 was introduced in February by Senators Elizabeth Warren (D-Mass.) and Steve Daines (R-Mont.), as well as Representatives Pramila Jayapal (D-Wash.) and Matt Rosendale (R-Mont.).

It seemed for months there was political momentum for passing the legislation before the mid-term elections in November, but the bill was eventually shelved, perhaps only temporarily. A few provisions of the bill are listed below and will be useful to consider in case the legislation comes up again after the election or in the next Congress.

  • The bill covers Members of Congress and their spouses.
  • It requires them to divest ownership of individual stocks, bonds, commodities, futures, and other securities including an interest in a hedge fund, a derivative, an option, or other complex investment vehicles.
  • Members may continue to own and trade common, widely held investment funds (e.g., mutual funds and exchange-traded funds), as long as they do not present a conflict of interest and are diversified.
  • Treasury securities, government employee retirement plans, and interests in small businesses are not covered by the ban.
  • Assets received as compensation from the primary occupation of a Member’s spouse are not covered by the ban. A Member’s spouse whose primary occupation is to trade assets for clients may continue to engage in that occupation.

Existing Rules for Government Employees

Executive branch officials have not yet seen near the level of inquiry regarding their stock purchases as lawmakers have, but laws do prohibit them from working on any projects that would affect their finances. 

"Additional regulations adopted in 1992 direct federal employees to avoid even an appearance of a conflict of interest," the Journal reports. "The 1978 Ethics in Government Act requires senior federal employees above a certain pay level to file annual financial disclosures listing their income, assets and loans. The financial figures are reported in broad dollar ranges."

Investments of $15,000 or less in stocks don't qualify as conflicts, and the same is true for amounts less than $50,000 in mutual funds pertaining to a particular industry.