Why one expert says Tom Price’s stock deals ‘may very well have’ broken the law (The Washington Post)

Amber Phillips
Jan 18, 2017
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While the facts are being debated, we know Rep. Tom Price (R-Ga.), whether through a broker or himself, bought and sold hundreds of thousands of dollars of health-care stock — sometimes around the time he was legislating health-care policy.

That means President-elect Donald Trump's pick to be health and human services secretary “may very well have” violated a 2012 law, the Stock Act, as well as other House ethics rules, said Larry Noble, general counsel for the nonpartisan ethics watchdog, the Campaign Legal Center, and former general counsel for the Federal Election Commission. Price is being grilled by Democratic senators Wednesday  on this and his plans to play a major role in dismantling the Affordable Care Act.

Noble says even if Price is in the clear legally, just the appearance of lawmakers making money off legislation is dangerous for democracy. Our conversation, below, has been edited for length and clarity.

THE FIX: You've written “with government service comes a pledge that you will only focus on serving the public, not yourself.” That's an agreed-upon notion, given insider trading has been banned for nearly 80 years, correct?

NOBLE: Right, but there was a question about whether some people thought the [Securities Exchange Act of 1934] applied to members of Congress. And the Stop Trading on Congressional Knowledge Act was passed to make it clear that insider trading rules did apply to members of Congress, because members of Congress don't just have information about specific companies; they also have information about things they are going to do that could affect these companies.

Have there been any prominent prosecutions under the Stock Act?

No. There have been prominent allegations, like the ones against Price. And if you're talking specifically about members of Congress, I can't think of any.

Other House conflict of interest rules could apply to Price. While the House ethics rules allow a member to vote on a bill that has wide applicability, even if it will affect a stock in which he is invested, the House ethics manual warns that you may be getting into deeper ethical problems when you introduce legislation and then buy a stock affected by that legislation.

Trump's transition team has pushed back hard against the notion Price violated any laws. Are there gray areas?

There are always some gray areas. That's why you have lawyers. So, for example, what is the definition of “nonpublic” information [that defines insider trading]? If Price knows he is going to introduce a bill, but it's also general public knowledge he's going to introduce a bill, then he buys stock in a company affected by that bill, is that operating on nonpublic information? Can he avoid the Stock Act by announcing the bill the day before and then introducing it and then buying the stock?

[Note: Trump's transition team said in a statement that it was public knowledge Price was working on a specific medical-device manufacturer bill he is accused of introducing and his broker buying related stock for. In his hearing Wednesday, Price acknowledged buying at least one stock — that of an Australian biotech firm — himself, without a broker. Price says he will divest himself of stock that could pose potential conflicts of interest if he is confirmed.]

He's raised the issue that he has a managed brokerage account. Is he saying he doesn't in any way direct or instruct the broker what to invest in? Does he pass any information on to the broker? It may mean that the broker, on a day-to-day basis, manages the account but Price calls and says, “I would like to buy this stock.” If he did, there could still be a violation of the Stock Act. [Trump's transition team said the broker “had the discretion to decide which securities to buy and sell” in Price's account.]

Does the damage come not just in people using their power for financial gain, but also for the perception they are doing that?

Very much so. Your job is to serve the American public, not to make yourself rich.

I wish [lawmakers would] understand that even if they think this bill is the right thing to do, when they take action that will allow them to financially benefit from it, they undercut their own credibility, and it calls into question the merits of the bill. And even if it may be the best thing for the country, nobody's going to buy it once they know you financially benefited from it.

So that leaves me to question how much lawmakers who do this really care about the underlying legislation vs. how much they are about enriching themselves.

What happens if you are accused of violating the Stock Act? Is there any enforcement?

Enforcement has not been very aggressive. The Office of Congressional Ethics can investigate (yes, that office House Republicans recently tried to gut), and they can refer it to the House Ethics Committee. Depending on the facts of the case, the Department of Justice could investigate. But mostly [lawmakers are] in a closed system where they're basically judging each other.

I think the balance right now is on the side of people getting away with things they should not get away with.

What questions would you ask Price about this if you could?

Why is he so tone deaf to the appearance of ethics issues, and why does he think as a congressman he should put himself in a position where he has to constantly rely on the technical definition of why he's not violating the law? I would think you'd want to keep yourself away from that. Or don't join the government. There are a lot of people who look at the ethics rules that apply to government offices, and they decide they just don't want to join the government.

Do you think the intent of the Stock Act — don't make money off public service — is a fundamental American value?

Yes. If the average American hires somebody to do something for them, I think they would like to know if that person is really working for somebody else, or has another interest at heart.

You see people's confidence deteriorating and just believing members of Congress are all crooks. I think a lot of the problems we have today are from this erosion of trust, that members of Congress are out for themselves or they're out for special interests.

Politicians should not be taking office to get rich, and anything — either in fact or appearance — that makes them look like they are enriching themselves at the expense of the American public should be illegal.

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