Pennsylvania Rep Kelly Under Ethics Review Over Share Purchase


WASHINGTON (AP) – A congressional ethics watchdog has concluded that there was “substantial reason to believe” that the wife of Pennsylvania Representative Mike Kelly used non-public information obtained through the her husband’s post in Congress to buy stock last year, a likely violation of federal law and house rules.

A Congressional Ethics Office report released Thursday night detailed the April 2020 share purchase at an Ohio steelmaker. The company had threatened to close a factory in the Kelly District unless the Trump administration took steps that would help make it more competitive, steps taken by the administration after the intervention of Kelly, a Republican and others.

The ethics office recommended that subpoenas be issued to Kelly, his wife, Victoria, a senior executive and former Commerce Secretary Wilbur Ross, as they declined to be questioned or participate in the investigation.

Victoria Kelly made an unusual stock purchase … on April 29, 2020 and took advantage of that purchase. The purchase took place just after her husband, as part of his official duties, learned of confidential information about the company, ”the report says.

Although the ethics office investigates complaints, only the House ethics committee has the power to punish a lawmaker for wrongdoing. The committee said in a statement that it would review the report and investigate further.

Kelly is just the latest in a collection of lawmakers from both sides to take a close look at the remarkable stock trades of recent years. This highlights the shortcomings of a law known as the Stock Act, which its supporters said would end stock speculation among members of Congress when it was passed with bipartisan support in 2012 as a result of a stock market scandal.

Kelly’s office did not respond to a request for comment on Friday. Neither he nor his wife have been criminally charged.

Insider trading cases are exceptionally difficult to prosecute because they rely on definitive proof that a person acted on the basis of non-public information.

The report details a timeline of events starting in early 2020, when Cleveland-Cliffs Inc. threatened to shut down a factory in the Kelly District of northwestern Pennsylvania. The plant employed 1,400 people to manufacture special steel used in transformers in the power grid. The company argued that foreign producers were exploiting a loophole in federal trade law that gave them an unfair competitive advantage and requested a re-application of tariffs.

Kelly and other members of the congressional delegations from Pennsylvania and Ohio quickly lobbied the Trump administration. The ethics report details an aggressive push from Kelly, who worked closely with the company while lobbying administration officials, including Mark Meadows, who was Trump’s chief of staff at the era.

Although the administration initially rejected their efforts, it eventually nodded, culminating in a phone call from Ross to the CEO of Cleveland-Cliff on April 28, 2020, informing him that she would make an announcement soon.

Word of the development quickly spread around Kelly’s office and the next day, several days before the announcement went public, Victoria Kelly bought between $ 15,001 and $ 50,000 in company stock, says The report.

She bought the stock at around $ 4.70 a share and then sold it when the price hit $ 18.11 a share, the report said.

Kelly’s office defended the purchase after garnering media attention in September 2020, calling it a “small investment to show support for the workers and management of this century-old plinth in their hometown, where they are all. both long-time residents “.

But investigators found “no public announcement from the Kelly’s regarding this purchase that would have elicited or demonstrated support for plant workers.”

Additionally, investigators noted that the purchase was out of the norm with its stock buying practices. Months before, Victoria Kelly had liquidated all of her individual stocks and invested the money in bonds and mutual funds, which are often considered the best investments for members of Congress looking to avoid questions about buying money. inappropriate actions.

The Kellys aren’t the only ones facing an ethical review.

The Associated Press previously reported that Democratic Representative Tom Malinowski of New Jersey has repeatedly failed to disclose transactions worth up to $ 1 million at medical and tech companies that had an interest in the response. to the virus. On Thursday, the House Ethics Committee revealed that Malinowski had been fined for repeatedly failing to report his stock transactions to Congress, as required by law.

Republican Representative Jim Hagerdorn is also facing an ethics probe into whether taxpayer money allocated to his office was used to contract services from businesses owned by his staff. And Republican Representative Alex Mooney faces an investigation into whether he used campaign money to make personal purchases.

But stock purchases, like Victoria Kelly’s, have garnered the most attention in recent months.

Former Republican Senators David Perdue and Kelly Loeffler of Georgia both lost their second-round offers for the Senate in January after their own stock trading became a major campaign issue. Both were investigated by the Justice Department and were ultimately cleared.

Perdue had dumped between $ 1 million and $ 5 million in stock in a company where he was previously a board member. After the markets fell, he bought it back and won a bargain after its price skyrocketed.

Loeffler and her husband, CEO and chairman of the parent company of the New York Stock Exchange, have given up millions of dollars in shares following a briefing about the virus.

Republican Senator Richard Burr of North Carolina has perhaps gained the most attention for his trades. He resigned as chairman of the Senate Intelligence Committee after the FBI obtained a search warrant to seize a cell phone.

Burr and his wife sold between $ 600,000 and $ 1.7 million in more than 30 deals in late January and mid-February, just before the market began to plunge and government health officials began ringing the bell. virus alarm. Burr was captured in a recording privately warning a group of influential voters in early 2020 to prepare for economic devastation.

The Justice Department investigated Burr’s actions, but did not press charges and close the case.

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