No Shortage of Murky Morals in the Trump Cabinet: Commerce Secretary Ross Faces Possible Ethics Investigations
This is the third in a series of posts looking at ethics issues in the Trump Administration.
If you’ve been following investigations into Environmental Protection Agency Chief Scott Pruitt and U.S. Interior Secretary Ryan Zinke, then a potential ethical inquiry into yet another Trump cabinet appointee comes as no surprise.
On June 28th, congressional Democrats requested that the Securities and Exchange Commission (SEC) investigate Interior Secretary Wilbur Ross for a potentially illegal trade on non-public information. In their letter to the SEC, Senator Elizabeth Warren (D-Mass.), Senator Richard Blumenthal (D-Conn.), and Representative Elijah Cummings (D-Md.) alleged that Secretary Ross may have engaged in insider trading when he sold his stocks in Navigator, a shipping company with close ties to Russian President Vladimir Putin’s inside circle, this fall.
The timing of Ross’s Navigator stock sale raises questions about whether the Secretary leveraged non-public information, potentially known to him because of his government position, to make investment choices. On October 26, 2017, the New York Times informed Ross that a forthcoming story would focus on Ross’s business with Navigator and Navigator’s business with the Russian government. Five days later, on October 31, Ross shorted his stocks—an investment strategy that allows sellers to sell securities and buy them back at a lower price after share values fall.
It seems likely that Ross’s short sale—valued between $100,000 and $250,000—was made on the correct bet that Navigator’s share price would fall when the story broke. Shortly after the Times and the International Consortium of Investigative Journalists released the Navigator report (as part of the Paradise Papers) on November 5, 2017, Navigator’s stock value fell by four percent. Democrats have asked the SEC to investigate whether this sale violated both the Trading Sanctions Act of 1984, which prohibits individuals from purchasing or selling securities while holding non-public information, and the STOCK Act of 2012, which prohibits executive branch officials from using insider information gained because of their government position “as a means for making private profit.”
Ross also faces the possibility of a separate investigation on an additional count of ethical wrongdoing. Last week, Citizens for Responsibility and Ethics in Washington (CREW) filed their own request for a Ross investigation led by the Office of Government Ethics (OGE). In addition to raising the possibility of insider trading, CREW leveled a second accusation: that Ross knowingly submitted false information to the OGE. Ross may have violated federal rules when he submitted inaccurate information about completed compliance with his ethics agreement.
Conflict of interest rules require that the Commerce Secretary divest from his investments in trading companies upon taking public office. Ross agreed to carry through with these divestitures during his confirmation process. On November 1, 2017, Ross informed the ethics office that he had “completed all of the divestures indicated in (his) ethics agreement.” Investigative journalists for Forbes, however, find this statement to be false: in November, Ross still held $10 million in stock in Invesco, one of several companies he promised to divest from. Ross himself admitted to continuing to hold stocks in Invesco after the November 1st deadline. On December 21, 2017, Ross revealed in a Public Financial Disclosure Report that he made official sales of Invesco stock on December 19 and 20, 2017.
Ethics lawyers are calling foul on Ross’s claims to have made an unknowing mistake. “There is substantial evidence that Secretary Ross may have knowingly and willfully made false and fraudulent statements,” an action prohibited by federal law, wrote CREW in its request for an ethics investigation of Ross.
You may be growing weary of stories about ethical transgressions by Trump cabinet appointees. We are too. But we need you not to give up–don’t become numb to these outrages. Only with sustained protest—with a loud refusal to accept corruption at the highest levels of U.S. government—can we protect our democracy. Participate in “Defend Democracy, Confront Corruption” vigils, taking place across the country on July 18th, and keep making noise.