Democrat Dirty Laundry: Moran Gambles With House Ethics Rules

May 25, 2010

Moran Gambles With House Ethics Rules
Does Virginia Dem’s “Stock Market Gambling” and Shady Earmarks Cross the Line?

SPIN CYCLE: Speaker Pelosi Vowed that Democrats Would Lead the “Most Honest, Most Open, and Most Ethical Congress in History”

“Our goal is to restore accountability, honesty and openness at all levels of government. To do so, we will create and enforce rules that demand the highest ethics from every public servant, sever unethical ties between lawmakers and lobbyists, and establish clear standards that prevent the trading of official business for gifts,” (Nancy Pelosi’s “A New Direction for America,” Page 21).

RINSE CYCLE: Moran Gambles With House Ethics Rules and Stacks the Deck Against Virginia Taxpayers

He was a stockbroker before he became a politician, and he continued playing the markets during his rise through Congress.

Rep. James P. Moran Jr. (D-Va.), a member of the powerful House Appropriations Committee, brought a swagger to both endeavors, sometimes winning big, sometimes losing big. At times, his investing became so busy it verged on what later came to be known as day trading.

Moran’s dual focus illustrates the latitude that every lawmaker has under congressional rules to invest largely as each chooses, a much less regulated approach than what Congress has required for other government officials and private-sector executives.

Moran’s trading has evolved over the years. Between 1995 and 2003, while representing bustling Northern Virginia, Moran made more than 537 options trades, potentially worth more than $3 million in all, according to a Washington Post review of records compiled by the nonprofit Center for Responsive Politics. In 1999, after the congressman lost about $120,000 over two years through options investments, attorneys for Moran’s second wife described his behavior as “stock market gambling” in court papers filed as part of a divorce.

Since Moran’s remarriage in 2004 to a wealthy entrepreneur, his disclosure statements show one of the most actively traded portfolios in Congress, with assets owned by his wife. In early 2005, he personally made more than two dozen risky, short-term investments designed to profit on the rise or fall of stock indices, his disclosure forms show.

The sprawling nature of those investments has caused them on occasion to intersect with Moran’s role as a legislator. Recently, the holdings included small investments in two companies for which Moran requested earmarks in 2008, the Post review found. Recently adopted congressional ethics rules require members of Congress to certify that they have no financial interest in the companies that receive their earmarks.

The holdings disclosed by Moran in 2008 included stock in General Dynamics and BAE Systems, which both received earmarks requested by Moran that year, according to financial and earmark disclosure records. The earmarks were for $1.6 million each.

In a March 2007 memo, the House ethics committee offered guidance about how to comply with new rules that leave it largely up to the lawmaker to decide if there is a conflict or seek guidance.

“A financial interest would exist in an earmark when it would be reasonable to conclude that the provision would have a direct and foreseeable effect on the pecuniary interests of the Member or the Member’s spouse,” the memo states. “Such interests may relate to one’s financial assets, liabilities, or other interests of the Member and spouse, such as ownership of certain financial instruments or investments in stocks, bonds, mutual funds, or real estate.”

The memo also said: “A financial interest would not include remote, inconsequential, or speculative interests,” which it generally defined as “shares in a diversified mutual fund, employee benefit plan . . . or pension plan that, in turn, holds stock in the company. (Robert O’Harrow Jr. and Dan Keating, “Rep. James Moran’s investments illustrate Congress’s leeway in trading,” Washington Post, 5/25/2010)

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