Ethics watchdog says two Republicans may have violated STOCK Act rules

The Office of Congressional Ethics (OCE) said there is “substantial reason to believe” that Republican Reps. Pat Fallon (Texas) and John Rutherford (Fla.) failed to report financial transactions on time, which is a violation of House rules and federal law.

In reports made public on Tuesday, the OCE — an independent watchdog that probes unethical behavior from lawmakers and refers incidents to the House Ethics Committee — outlined more than 100 financial transactions the two lawmakers reported past the Ethics Committee’s deadline, some of which were outside the grace period and triggered late fines.

According to the OCE, Fallon — who was first elected to the House in 2020 — failed to disclose 122 financial transactions on time between January and December 2021. The transactions were valued between $9 million and $21 million. Fallon eventually “made up” the tardy disclosures, according to the OCE.

But when he filed his first and second periodic transaction reports (PTR) — which included transactions valued between $7.8 million and $17.5 million, and $1.2 million and $3.1 million — the freshman congressman included a total of 119 late transactions, a large portion of which were beyond the committee’s grace period. He ultimately paid $600 in late fees.

Congressional lawmakers are subject to the Stop Trading on Congressional Knowledge Act of 2012, known as the STOCK Act, which requires that members of Congress disclose financial transactions within 45 days of them being executed. The law also forbids lawmakers from using nonpublic information that is received in connection to their job to make a personal profit.

In addition, House rules require that lawmakers report qualifying transactions on PTRs within 30 days of the individual becoming aware of the transactions, and no more than 45 days after it is carried out.

A spokesperson for Fallon in June 2021 said the congressman did not file his transactions on time because he was “unfamiliar with how frequently members of Congress are required to file financial disclosures,” according to the OCE report. In a December 2021 letter, Fallon’s attorney said the congressman only learned of the 45-day window to report stock transactions in late May or early June.

But the OCE is now saying that is likely false. According to the watchdog, evidence suggests that Fallon “was on notice” of his obligations earlier than he said, pointing to an ethics training all freshman lawmakers receive within 60 days of being sworn in to Congress.

Fallon’s spokesperson said the congressman participated in the training. The watchdog also noted that Fallon received communications regarding his disclosure responsibilities.

“Evidence collected by the OCE suggests that Rep. Fallon knew, or should have known, about his PTR filing obligations by February 2021,” the OCE report reads.

The Board of the OCE in February 2022 voted unanimously to refer the incident involving Fallon to the Ethics Committee, suggesting that the group issue the congressman a subpoena. Fallon did not participate in the OCE probe.

The watchdog first received a request to look into Fallon’s stock transactions in October 2021. 

Kate Belinski, an attorney representing Fallon, responded to the OCE report in a March 2022 letter, asking that the Ethics Committee dismiss the referral from the watchdog “and take no further action in this matter.”

She reiterated that the freshman congressman was unaware of the PTR filing requirements, calling the OCE investigation “unnecessary.”

Rutherford fell into a similar issue, according to his OCE report. The congressman, who has represented Florida’s 4th Congressional District since 2017, allegedly filed more than 150 late transactions between his swearing in and December 2021, a number of which fell outside the Ethics Committee’s grace period.

The transactions were valued between $652,000 and $3.5 million. A majority of the tardy filings occurred in the congressman’s first term.

In addition to making late disclosures, the OCE said Rutherford’s PTR filings had included transaction dates that did not match up with dates on his statements.

In December 2021, Rutherford’s counsel said the late financial disclosures were “a simple misunderstanding and inadvertent human error,” according to the OCE report.

The counsel said the congressman’s chief of staff, Jennifer Bradley, had been in charge of reviewing Rutherford’s IRA statements and pulling together his transaction report, and was not initially aware of the filing deadline.

Counsel also said the congressman was enforcing a new system for reviewing his transactions.

The OCE Board ultimately voted to refer the case to the Ethics Committee, writing that “there is substantial reason to believe that Rep. Rutherford failed to file timely PTRs for various reportable transactions, in violation of federal law and House rules.”

Additionally, it recommended that the Ethics Committee subpoena the congressman.

Belinski, who also represents Rutherford, wrote in a separate March 2022 letter that Bradley had been working with the Ethics Committee for the past year to amend the public record and ensure that transactions are filed properly and on time going forward. She said the errors were a result of a misunderstanding of rules and human error.

She also asked that the Ethics Committee dismiss the referral and not take additional action, calling the probe “unnecessary.”

The OCE first received a request to look into Rutherford’s filings in October 2021.

In a third OCE report released on Monday, which probed Rep. Chris Jacobs (R-N.Y.), the Board did not make a recommendation on an allegation that the congressman failed to file financial transactions on time because its voted ended in a 3-3 tie. The Ethics Committee in a statement said it will review the matter to gather additional information needed to complete the review.