Congressman breaks insider trading law twice in a week with $355 million in sales

For years, the STOCKS Act – the law intended to prevent Congressional insider trading and increase transparency – has been criticized as ineffective and frequently ignored.

Late in September 2024, Representative Darrell Issa of California provided the public with additional proof of the legislation’s shortcomings as he made two filings, both in stark violation of the law.

First, on September 25, Issa reported seven bond sales worth up to $175 million. These trades were notable not only for their size but also because the Congressman was approximately 500 days late with all of the filings.

Just a day later, the Representative reported another batch of bond sales, this time valued at up to $180 million. Unlike the September 25 filing, the second one was somewhat less late. The oldest trade was filed 234 days after execution, while the newest was only slightly in violation as it was 52 days old.

U.S. Politicians have a 45-day deadline to report their trades.

How Darrell Issa’s Congressional trades reveal issues with the STOCKS Act

Both of Darrell Issa’s reports also highlight another issue with the reporting requirements as it is, in fact, exceptionally difficult to gauge their actual size.

As most of the sales were filed as being between $5 and $25 million, he may have offloaded as little as $71 million worth of assets or as much as $355 million in total.

Along with the obvious transparency issues, such discrepancies can obfuscate the scale of potential conflicts of interest. 

It is worth remembering that many politicians – including those who tend to report their trades within the designated grace period – are known for investing in companies they directly oversee through Congressional Committees and Subcommittees.

Late in 2023, Senator Tina Smith – a member of the Committee of Health – made headlines when she purchased the stock of a small healthcare company from her state shortly before the shares entered a substantial rally.

More recently, Representative Debbie Wasserman-Schultz – noted as the second-best congressional trader of 2023 – invested in a relatively obscure mining company shortly before its stock entered a major rally. 

The Congresswoman sits on the Subcommittee on Environment, Manufacturing, and Critical Minerals.

Lawmakers have been violating the law for years

Unfortunately, Darrell Issa is far from the sole example of lawmakers blatantly ignoring the law. In 2023, several major publications noted that as many as 78 members of Congress have violated the STOCKS Act in several hundreds of individual cases.

The usual defense for such actions includes, ironically, ignorance of the law, clerical mistakes, or accountant mistakes.

The Congresspeople have also traditionally not been held accountable for their violations as the fines tend to be small – approximately $200 – or even waived by ethics officials.