Nearly a dozen stocks appeared on Sen. Tim Scott’s 2022 financial disclosure that weren’t there in 2021. But the South Carolina Republican, the only member of Congress running for president, never reported buying the shares, raising questions about whether he followed a mandate Congress imposed on itself more than a decade ago.
A spokesperson for Scott’s presidential campaign said he did comply, but would not say how.
The amounts are hardly eye-popping, but they include shares in companies whose businesses could be affected by congressional action.
Scott’s Senate office referred questions to his campaign, which did not provide details about the transactions but denied any violation of the Stop Trading on Congressional Knowledge (STOCK) Act, which was enacted in 2012. The law prohibits insider trading and requires added financial disclosures, including timely reports on the sale or acquisition of stocks worth more than $1,000.
“He takes his compliance obligation seriously, and he is fully compliant with all reporting requirements,” a Scott campaign spokesperson said.
Scott’s 2022 financial disclosure, which was filed in mid-August, shows a ballooning number of assets. Whereas his past filings routinely listed two or three corporate securities, Scott reported owning tens of thousands of dollars worth of investments, including shares of blue chip stocks in companies such as Apple Inc., the Boeing Co. and the Coca-Cola Co.
Just one of those stocks, in Exxon Mobil Corp., appeared on his 2021 filing. And according to the public database of congressional disclosures, Scott filed no transaction reports showing he bought the shares.
Violations are common and have increasingly generated blowback from the public and political opponents in recent years, but watchdogs said they can be difficult to prove. Lawmakers could purchase stocks valued under the $1,000 threshold that then appreciate, or make multiple small purchases of stock in a single company. Neither scenario would require a separate transaction report.
“That’s usually my first question — was there a surge in the market and now they have to report it?” said Delaney Marsco, a senior legal counsel at the Campaign Legal Center who works on governmental ethics.
Senate disclosures do not require members to give an asset’s exact value; instead, they describe which holdings fall in different value ranges. Ten of Scott’s 11 newly reported stocks were valued between $1,001 and $15,000. A handful of small transactions could have bumped the value up over the annual threshold without requiring any reporting on the trades.
Dylan Hedtler-Gaudette, a senior government affairs manager with the Project On Government Oversight, said that explanation is less plausible for Scott’s stock in Boeing, which is valued between $15,001 and $50,000. Craig Holman, a government affairs lobbyist at Public Citizen, agreed that Scott’s stock in Boeing at the very least could not have appreciated to a value that high in the reporting period.
“That’s not possible. There is no appreciation of the stock market of that much, even in cryptocurrency,” Holman said. “This clearly appears to be a violation of the STOCK Act.”
Scott’s spokesperson called the criticism “offensive, baseless and bogus allegations made by left-wing special interest groups.”
Defense contractors in portfolio
In addition to Apple, Boeing, Coca-Cola and Exxon, Scott reported in his latest disclosure owning between $1,001 and $15,000 in stock in AT&T Inc., Alphabet Inc., the American Airlines Group Inc., Citigroup Inc., Delta Air Lines Inc., Palantir Technologies, Procter & Gamble Co. and Target Co.
Because of Scott’s position on the Senate Foreign Relations Committee, which has jurisdiction over foreign economic, military, technical and humanitarian assistance, watchdogs said his portfolio could raise concerns about conflicts of interest.
The Boeing Co. is one of the largest defense contractors in the country in terms of revenue. Palantir Technologies has regularly contracted with the U.S. government and recently signed lucrative deals with the U.S. Air Force and the Ukrainian government to help rebuild the war-torn country.
Scott joined the committee in the 118th Congress, after the close of the reporting period for his 2022 financial disclosure. His campaign did not respond when asked if he still holds his shares in Boeing and Palantir. No transaction reports have been filed announcing a sale of shares.
“That absolutely could be a conflict of interest,” Marsco said. “It could raise serious questions in the minds of the public about whether or not there’s an access to information that is prompting these stock trades.”
“The Senate Foreign Relations Committee is involved in the approval of the sale of arms and other equipment,” said Hedtler-Gaudette. “So if you’re on the committee and you’re invested in these companies that manufacture arms and equipment and they’re benefiting financially from those transactions, there could definitely be a conflict of interest.”
Fines of $200
STOCK Act violations are punishable by a $200 fine for each offense, a paltry sum that Marsco said does little to disincentivize rule-breaking considering the wealth most members of Congress have.
Scott reported income in 2022 of $380,000 to $402,000 on top of his congressional salary. The biggest source was royalties from a book contract with HarperCollins Christian Publishing.
Calls for stricter laws around insider trading and steeper penalties have gotten louder since the 2020 pandemic.
The Department of Justice investigated several members suspected of trading on information they learned ahead of lockdowns and business closures imposed in response to the onset of the COVID-19 pandemic. No charges were filed, but the investigations and subsequent reporting brought greater attention to a previously esoteric issue.
A vote on legislation banning members from owning or trading individual stock appeared imminent near the end of the 117th Congress. But Democrats, who controlled both the House and Senate, did not bring the proposal to the floor before the end of the year.
Lawmakers renewed their push for a ban in the 118th Congress. A variety of legislation has been introduced in both the House and Senate to address the issue. Most proposals would ban members from owning or trading individual stocks and several would increase penalties for those who violate the law.
“One major step would be preventing these individual stock trades,” Marsco said. “That’s one line of defense to preventing these kinds of conflicts of interest that maybe don’t rise to the level of insider trading but still are something that we, as members of the public, might not want our elected officials getting up to.”
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