Democratic Rep. Tom Malinowski puts his personal assets in a blind trust after violating federal stock disclosure laws
Thomson Reuters
- Malinowski for months failed to disclose dozens of big-dollar stock trades.
- Many trades occurred during the early weeks of the COVID-19 pandemic.
- A blind trust will help him "avoid any conflict of interest or appearance of any such conflict."
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Rep. Tom Malinowski - beset by ethics questions involving his personal finances - is ceding most control over his seven-figure stock fortune.
The New Jersey Democrat has created and shifted financial assets into a blind trust after Insider earlier this year revealed he violated the federal STOCK Act by not disclosing dozens of financial transactions, including a flurry of stock purchases and sales during the initial days of the COVID-19 pandemic.
The blind trust, which Malinowski detailed in a 25-page document filed August 17 with congressional officials, is operated by an independent trustee. The trustee will buy and sell investments on Malinowski's behalf "without any participation in, or knowledge of, such decisions" by Malinowski himself, according to the terms of the trust.
The trust formation documents indicate Malinowski has put between $1.56 million and $3.9 million worth of stock and financial funds into the trust.
Malinowski's stock holdings that will initially enter the trust include exercise equipment company Peloton Interactive, Devon Energy Corp., and Five9 Inc., a call contact center company recently purchased by Zoom.
After Insider's report in March on Malinowski's STOCK Act violations, the congressman continued to trade individual stocks well into the spring.
Those trades also proved problematic, as Malinowski disclosed them after a federal deadline - again in violation of the STOCK Act.
By then facing multiple ethics complaints and an ethics investigation, the congressman directed his financial advisor to stop the buying and selling and said he'd create a blind trust for his assets.
Malinowski's trust establishment document states that he authorized the trust "to avoid any conflict of interest, or appearance of any such conflict, which may arise from his duties and powers" as a congressman.
Amanda Osborne, Malinowski's spokesperson, declined to comment Tuesday, referring Insider to comments the lawmaker made about the trust in July, after the House Ethics Committee approved his request to establish one.
"I'm going well above what the law requires in setting up a blind trust, but I've come to believe it's what the law should require," Malinowski told NJ Advance Media on July 20. "There's nothing wrong with being invested in the stock market but when you're a lawmaker, even if you take a totally hands-off approach, the perception of conflicts of interest is inevitable."
Malinowski is almost certainly paying a significant sum of money to create a blind trust managed by financial professionals.
How much? That's unknown, as the "trustee fee schedule" page included in the trust documents Malinowski filed with congressional officials is redacted.
The Jackson Hole Trust Company of Wyoming will serve as custodian of Malinowski's blind trust. The trust will terminate when Malinowski leaves congressional office or upon the congressman's "death or incompetence" - whichever occurs first, according to the trust formation document.
Tom Williams/CQ-Roll Call, Inc via Getty Images
Numerous STOCK Act violations in 2021
Insider and other news organizations have this year identified numerous members of Congress who've failed to properly report their financial trades as mandated by the STOCK Act.
The 2012 law was designed to combat insider trading among elected officials and force lawmakers to be more transparent about their personal financial dealings. Members who've violated it recently include:
- Sen. Dianne Feinstein, a Democrat of California
- Sen. Tommy Tuberville, a Republican of Alabama
- Sen. Rand Paul, a Republican of Kentucky
- Rep. Pat Fallon, a Republican of Texas
- Rep. Katherine Clark, a Democrat of Massachusetts
- Rep. Dan Crenshaw, a Republican of Texas
- Rep. Sean Patrick Maloney, a Democrat of New York
- Rep. Blake Moore, a Republican of Utah
- Rep. Debbie Wasserman Schultz, a Democrat of Florida
- Rep. Kathy Castor, a Democrat of Florida
- Rep. Lori Trahan, a Democrat of Massachusetts
- Rep. Steve Chabot, a Republican of Ohio
- Rep. Cheri Bustos, a Democrat of Illinois
- Rep. August Pfluger, a Republican of Texas
- Rep. Diana Harshbarger, a Republican of Tennessee
Former Rep. Harley Rouda, a Democrat of California who's attempting a comeback, also failed to properly disclose stock trades.
Rep. Lois Frankel, a Democrat of Florida, likewise appears to have violated the STOCK Act with disclosures a few days late, though her office has disputed that.
Sen. Jeff Merkley, a Democrat from Oregon, in March introduced a bill, named the "Ban Conflicted Trading Act." The bill, which has not received a hearing, would prohibit members of Congress from trading individual stocks.
Sen. Elizabeth Warren, a Massachusetts Democrat, and Rep. Pramila Jayapal, a Washington Democrat, have told Insider they plan to file separate bills also aimed at curtailing lawmakers' stock trades.
Some federal lawmakers voluntarily abstain from trading stocks. Others trade only in bonds, mutual funds, exchange-traded funds, and other garden-variety investments.
Like Malinowski now, a few, such as Sen. Jon Ossoff, a Georgia Democrat, have placed their assets in blind trusts.
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