A member of the U.S. Congress could find himself in hot water for some questionable trades around bank stocks prior to the takeover of a collapsed bank by the FDIC and the declining price of many stocks in the sector.
What Happened: Rep. Josh Gottheimer (D-NJ) has been one of the most prolific members of Congress when it comes to making stock and options trades during his time in office.
A new filing on April 20 from the representative, who has been in office since 2017, showed multiple transactions made over the past month including the sale of several bank stocks.
Here’s a look at the bank stocks that were reported in the April 20 filing, along with their sale date.
- Ameris Bancorp ABCB: $1,000 to $15,000, March 14
- Fidelity National Information FIS, $15,001 to $50,000, March 16
- Morgan Stanley MS: $1,000 to $15,000, March 6
- Charles Schwab Corporation SCHW: $1,000 to $15,000, March 6
- Charles Schwab Corporation: $1,000 to $15,000, March 14
- Seacoast Banking Corporation of Florida SBCF: $1,000 to $15,000, March 29
- SVB Financial Corp: $1,000 to $15,000, March 9
The transactions were reported by QuiverQuant, who also shared in a tweet that the sales could be concerning as they were in the “midst of the banking crisis.”
“Gottheimer sits on the House Financial Services Committee,” QuiverQuant flagged in the tweet.
The sale of the SVB Financial, owner of Silicon Valley Bank, stock happened one day before the bank was taken over by the FDIC and the stock would later be delisted.
After selling the bank stocks, Gottheimer would issue a series of tweets about banking regulations.
“This week, I questioned federal banking regulators over their failure to properly oversee Silicon Valley Bank. We’re working to the bottom of what happened and why regulators didn’t utilize the tools they already had to help prevent a collapse,” the Congressman tweeted on March 30 of one of his former stock positions.
On April 14, Gottheimer said he was calling for an investigation into the failure to stop the collapse of several banks sooner.
“We need to know why the Federal Reserve, FDIC, & state regulators didn’t use the tolls they had to prevent Silicon Valley Bank’s collapse,” Gottheimer tweeted on April 14.
During a hearing by the House Financial Services Committee, Gottheimer questioned witnesses about the run on Silicon Valley Bank and the eventual collapse of the bank.
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Why It’s Important: The questioning of the collapse of Silicon Valley Bank likely came as the Congressman lost money on his trading position.
Data from Quiver Quant shows that the Congressman bought SVB Financial stock on July 15, 2022, when shares traded between $396.04 and $412.33.
The sale happened on March 9 when shares traded between $106.04 and $177.75. A day before the transaction by Gottheimer, shares traded between $264 and $271. Shares of the bank stock were over $300 in February 2023.
Shares would halt on March 10 when it was announced that the FDIC had taken over the bank. Shares would later delist and the bank now trades on the OTC for less than $1 a share.
By selling when he did, Gottheimer lost money, but also saved himself from losing more, which could play into the question of if he had any alleged inside information as a member of the House Financial Services Committee.
While some of the other bank stocks the Congressman sold have rebounded, shares of Charles Schwab are down since the day of the sale.
Gottheimer sold the stock on March 6 when shares traded between $75.94 and $77.32 and on March 14 when shares traded between $55 and $61.11. Shares of Charles Schwab traded at $54 at the time of writing.
Unusual Whales listed the 140% gain on holding shares of ChemoCentryx before it was acquired by Amgen as the biggest gainer among stock positions from members of Congress in 2022, a position that was held by Gottheimer.
The Congressman has been one of the most active traders among members of Congress, with a reported 134 trades in the first quarter of 2021, something he was called out on during a television interview.
“That’s news to me,” Gottheimer said during the interview.
UnusualWhales also flagged the purchase of an unusual option by Gottheimer in 2022 when he bought options in Microsoft Corporation before Congress signed the CHIPS Act. It was noted that the Congressman previously worked at Microsoft before his time in office.
The news of Gottheimer selling bank stocks follows a recent filing from Rep. John Curtis (R-UT) who sold shares of First Republic Bank and Bank of America in March.
Transactions like those from Gottheimer could increase calls to ban members of Congress from making trades while in office.
Photo: Shutterstock
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