More than 2,600 bureaucrats across numerous federal agencies have disclosed trades for stocks in companies seeking their favorable approval, a Wall Street Journal investigation has found.
The Wall Street Journal shared these findings after obtaining and analyzing more than 31,000 financial-disclosure forms from about 12,000 senior career employees, political staff and presidential appointees. The review found that government officials, their spouses and their dependent children made more than 315,000 trades in stocks, bonds and funds between 2016 and 2021.
In one example of the kind of trades these influential bureaucrats made, the Wall Street Journal reported a Defense Department official bought stock in a defense industry company five times before the firm won new military contracts.
In another example, a top official at the Environmental Protection Agency (EPA) disclosed oil and gas stock purchases.
Defense Department officials in the office of the secretary together owned between $1.2 million and $3.4 million in stock in aerospace and defense companies on average each year from 2016 to 2021. Some even held stock in Chinese firms the U.S. was considering blacklisting.
In at least one case the U.S. Food and Drug Administration improperly permitted an official to buy dozens of food and drug stocks on their no-buy list.
Government bureaucrats could stand to reap huge personal benefit by trading in stocks on companies seeking their regulatory approval or hoping to win the lucrative government contracts they oversee.
The Wall Street Journal found more than 60 employees from five different agencies including the Federal Trade Commission and the Justice Department, reported stock trades in companies shortly before their departments announced enforcement actions against those companies.
More than 200 senior EPA employees — almost a third of the agency’s senior level employees — reported investments in companies that were lobbying the regulatory agency. The Wall Street Journal reported EPA employees and their family members together owned between $400,000 and nearly $2 million in oil and gas company stocks between 2016 and 2021.
The Wall Street Journal reported at least 70 federal employees reported using riskier trading techniques such as short selling. These trade can be considered high risk/high reward and some individual trades were reportedly valued at between $5 million and $25 million.
Congress has been the subject of some scrutiny for how lawmakers deal with stocks in businesses that could be heavily impacted by the laws they create. In 2012, Congress did pass the Stop Trading on Congressional Knowledge (STOCK) Act with the intent to curb some of this trading.
This year, lawmakers also passed a law requiring federal judges to publicly disclose their stock trades.
The 1978 Ethics in Government Act does require executive branch bureaucrats above a certain pay grade to file annual financial disclosures, however most of these disclosures are only available to the public upon request. In some cases, that request process can be slow.
According to the Wall Street Journal, some agencies made it difficult to request these records and others still haven’t turned over all the requested records.