3 NJ Congress Members Fined For Stock Violations: Report

Update: This story now includes a statement from Rep. Mikie Sherrill's office that Patch received after the article was initially published.

NEW JERSEY — Three lawmakers representing New Jersey are among 63 members of Congress who violated a law designed to combat insider trading, according to Business Insider. Reps. Tom Malinowski, Mikie Sherrill and Bill Pascrell violated the STOCK Act in recent years, the report states.

The three New Jersey lawmakers — all House Democrats running for re-election — were mostly found to have filed late disclosures on their trades, according to the report.

Since the allegations against Malinowski emerged, he placed his life savings into a blind trust and co-sponsored legislation that would ban members of Congress from trading stocks, his spokesperson told Patch. Sherrill also divested from individual stocks two years ago, converting them to exchange-traded funds (ETFs), according to her office.

Patch also reached out Pascrell's press contact but did not receive any response in time for initial publication.

The Stop Trading on Congressional Knowledge (STOCK) Act — designed to prevent insider trading and conflicts of interest — became federal law in 2012. A key provision requires that lawmakers quickly disclose any stock trades from themselves, a spouse or dependent children.

Lawmakers who violate the STOCK Act typically pay a small fine — $200 is standard for a violation — but no public records exist that show who has violated the law or received a fine. Critics and some lawmakers have pushed for stricter regulations, including a ban on federal lawmakers from trading individual stocks. The issue has become pivotal for midterm campaigns around the nation.

In May 2021, the Associated Press reported that Malinowski traded as much as $1 million in stock of medical and tech companies involved in the COVID-19 pandemic response. One year earlier, Malinowski said, "This is not the time for anybody to be profiting off of selling ventilators, vaccines, drugs, treatments, PPE (personal protective equipment), anywhere in the world."

Malinowski (NJ-7) failed to disclose as much as $3.2 million in trades, according to the AP. In November 2020, the congressman sold between $15,001 and $50,000 worth of stock in drugmaker Merck, which Malinowski didn't previously disclose owning, the report states. The company's value tumbled two months later after Merck announced it would discontinue efforts to develop a COVID vaccine.

After the AP report, Malinowski's office said the congressman's broker made the trades based on publicly available information and without the lawmaker's knowledge. Gagnon Securities — Malinowski's broker — said the same.

In October, the independent Office of Congressional Ethics found "substantial reason to believe" that Malinowski violated federal laws designed to promote transparency and defend against conflicts of interest. The office voted 5-1 to refer its findings to the House Committee on Ethics, which confirmed Oct. 21 it will continue reviewing the matter, according to Business Insider.

Malinowski has since placed his stocks in a blind trust and paid a $200 fine.

"The Office of Congressional Ethics found no improper conduct by Congressman Malinowski, other than late paperwork filings," said Naree Ketudat, a spokesperson for Malinowski. "Congressman Malinowski has already gone above and beyond the requirements of the law by placing his life’s savings into a qualified blind trust — that is why he also supports and is sponsoring the ban on member stock trading.

"The public needs to have trust in their representatives, and our current financial disclosure system is primed for partisan exploitation. Instead of attempting to work within a system we know is broken, let’s put in place simpler requirements that eliminate even the suggestion of impropriety."

Meanwhile, Sherrill (NJ-11) was months late disclosing two sales of vested stock her husband earned from his employment, according to Business Insider. The sales were worth up to $350,000, the report said.

Sherrill paid a $400 fine. She also sold her individual stocks and bought ETFs, which pool investments from various industries into major stock exchanges. Sherrill cannot purchase or sell individual stocks within the funds.

"After finalizing an internal review, we discovered two sales of vested stock that Rep. Sherrill’s husband received as part of his compensation that were properly reported in the 2020 annual report but did not have PTRs," the congresswoman's office told Patch. "We proactively addressed this oversight by filing the missing PTRs and proactively paid the late fee.

"Rep. Sherrill took these steps to proactively address an oversight that was caught in our internal annual review. It kept in the same spirit of the actions she and her husband took in 2020 to divest of all individual stock holdings and move to exchange traded funds (ETFs), which they did to be as transparent as possible and go above and beyond what is required for Members of Congress."

Pascrell (NJ-9) was overdue in reporting stock trades he made in December 2019 in General Electric and in August 2019 in Johnson & Johnson, Business Insider reports.

But Pascrell told NBC News in February, "The few that I have — stocks — I just sold."

Lawmakers in the House and Senate have introduced bills that would require members of Congress and their families to place stock portfolios in blind trusts while in office. But the bills remain in committees and haven't seen a vote in either chamber.

Malinowski is among three members of Congress representing New Jersey who co-sponsored the House measure. Reps. Donald Payne, Jr. and Josh Gottheimer also co-sponsored the legislation.

In March 2020, Pascrell called for federal investigations into allegations that several Senators violated the STOCK Act. The Senate Committees on Health and Foreign Relations held a closed meeting Jan. 24, 2020, about the COVID outbreak and how it would affect the United States. Several Senators were accused of using that insider knowledge to sell their stocks before the market crashed a month later.

The Department of Justice initiated a probe on March 30, 2020, into the stock transactions. But the DOJ ended its investigations in the coming months into trades from Senators Dianne Feinstein (D-CA), Richard Burr (R-NC), Jim Inhofe (R-OK) and then-Senator Kelly Loeffler. No charges were brought.

Read the full Business Insider report.