As pandemic spread pain and panic, congressman chased profit
New Jersey Rep. Tom Malinowski has scolded those looking to capitalize on the once-in-a-century pandemic
May 21, 2021, 4:13 AM
10 min read
FILE - In this March 10, 2021, file photo, Rep. Tom Malinowski, D-N.J., speaks during a hearing on Capitol Hill in Washington. Malinowski has scolded those looking to capitalize on the once-in-a-century pandemic. But the two term Democrat is not heeding his own admonition. Records show he's bought or sold as much as $1 million of stock in medical and tech companies that had a stake in the virus response. (Ken Cedeno/Pool via AP, File)
WASHINGTON -- In the early days of the pandemic, New Jersey Rep. Tom Malinowski scolded those looking to capitalize on the once-in-a-century health crisis.
“This is not the time for anybody to be profiting off of selling ventilators, vaccines, drugs, treatments, PPE, anywhere in the world,” the two-term Democrat and former assistant secretary of state told MSNBC in April 2020.
He did not heed his own admonition.
Since early 2020, Malinowski has bought or sold as much as $1 million of stock in medical and tech companies that had a stake in the virus response, according to an analysis of records by The Associated Press. The trades were just one slice of a stock buying and selling spree by the congressman in 2020, worth as much as $3.2 million, that he did not properly disclose.
The issue of congressional stock trading took on a new urgency last year when at least three senators were the subject of inquiries about whether they made financial decisions based on insider information. Though no one was charged, their dealings stirred outrage and highlighted the limitations of the Stock Act, a 2012 law intended to curtail stock market speculation by lawmakers.
Malinowski's trades received little attention at the time. Yet his subsequent failure to report his trading activity to Congress as required by law, which was first reported by Business Insider, have made him the latest to face scrutiny, with two complaints filed against him with the Office of Congressional Ethics.
When millions were out of work and markets were hemorrhaging, Malinowski snapped up securities at bargain prices — profiting when valuations recovered. In other cases, he sold shares before they fell substantially, according to the AP's analysis of a list of trades that his office said he made in 2020.
He also engaged in the controversial practice of short-selling stocks, placing bets that the values of specific businesses would decline at a time when many companies were pleading with the government for a financial lifeline.
“It boggles my mind why he's doing it,” said Richard Painter, a University of Minnesota law professor who served as President George W. Bush’s ethics attorney and later ran for Senate as a Democrat. "It's a huge conflict of interest and not an acceptable situation.”
There is no indication Malinowski acted on inside information to make his investment decisions. Still, it’s difficult to assess the full scope of his financial activity. Nearly six months after 2020 drew to a close, mandatory reports to Congress detailing his trades have not been made public.
In an interview Thursday, Malinowski said his failure to file was “a mistake that I own 100%.” He said the reports, some of which were due over a year ago, have been submitted though not released by the congressional ethics office, which did not respond to a request for comment Thursday.
Malinowski said his broker handles all of his trading decisions and he does not speak to the firm about specific transactions. His office provided a statement from the firm, Gagnon Securities, stating that it made trades “without Congressman Malinowski’s input or prior knowledge.”
“At no point in the last 25 years have I directed, suggested, or even asked questions about a particular trade being made by my brokerage firm,” Malinowski said. He said the one exception was a request to sell stock that he was obligated to get rid of after joining Barack Obama’s State Department in 2014.
He also said he was in the process of setting up a blind trust to hold his financial portfolio, which he will have no control over. And he said other members of Congress should do the same.
Painter noted that Malinowski had ultimate control over his account when the trades were made, a fact the congressman acknowledged.
“Of course he is going to say his broker makes all the decisions," Painter said.
The Stock Act, which proponents initially said would end stock speculation among members of Congress, passed with bipartisan support in 2012 in the wake of a stock trading scandal.
