Rep. Garcia used insider information as a member of the House Committee on Transportation and Infrastructure to shield his stock portfolio from losses
End Citizens United (ECU) today filed a complaint with the Office of Congressional Ethics (OCE) against Congressman Mike Garcia (CA-27) for violating the STOCK Act and failing to file complete financial disclosure forms. The complaint states that Rep. Garcia, a member of the House Committee on Transportation and Infrastructure, used insider information and sold tens of thousands of dollars worth of shares of Boeing stock. Rep. Garcia then orchestrated a plot to conceal the transactions until after his reelection, which he won by only 333 votes.
“Congressman Garcia not only betrayed his constituents’ trust by using non-public information to protect his financial assets, but he illegally covered it up by purposely failing to report the trade until after his reelection. This is a blatant abuse of power and a slap in the face to families in his district who trusted him to fight for their needs, not to safeguard his stock portfolio,” said End Citizens United President Tiffany Muller. “For years, Congressman Garcia has engaged in a consistent and disturbing pattern of violating the law to conceal his financial interests from his constituents. We urge the Office of Congressional Ethics to immediately launch an investigation into Congressman Garcia’s actions and hold him accountable for this egregious abuse of power.”
The violations:
STOCK Act
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The STOCK Act explicitly affirms that Members of Congress are subject to the insider trading prohibitions under securities laws. Members of Congress may not use information gained in the performance of official duties “as a means for making a private profit.”
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Rep. Garcia served on the Transportation Committee during the months in which the committee held private hearings on the culture and alleged failings of Boeing Company that led to the deadly 737 MAX plane crashes.
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Because of his committee membership, it is likely Rep. Garcia knew that the committee would release a report that was unfavorable to Boeing Company, and he also likely knew the committee intended to release the report in early September. Any information Rep. Garcia learned during private congressional hearings and committee meetings are material nonpublic information under House Ethics guidance because such information was not available to the general public and an investor would consider the contents and timing of a congressional report on Boeing’s deadly crashes important in making an investment decision concerning the company.
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Rep. Garcia sold shares of Boeing stock for a profit up to $50,000 on August 10, 2023. The timing of the sale and the release of the report suggest that Rep. Garcia intended to sell his Boeing shares before the report was released to avoid the likely prospect that a damning congressional report would depreciate the value of his Boeing shares.
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Rep. Garcia also did not timely report stock transactions on at least three separate occasions—including a sale of Boeing stock made before his 2020 reelection but disclosed months later—only after Election Day. The STOCK Act requires a Member of Congress to file a periodic transaction report within 30 days of receiving notice of a covered stock transaction, but no later than 45 days from the date of the transaction.
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Rep. Garcia’s failure to disclose his sale of Boeing Stock by the mandatory deadline is particularly egregious because he waited until after his election to report the stock transactions. He also failed to disclose two additional stock transactions by the statutory deadline, ensuring the public would not know about the transactions until after the election: the sale of American Airlines Group, Inc. stock and Tesla, Inc. stock.
Failure to Disclose Stock Transactions on Personal Financial Disclosures (PFDs)
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Additionally, Rep. Garcia failed to disclose several stock transactions on his PFDs in violation of the STOCK Act. Under the law, Members must disclose the purchases and sales of assets on Schedule B of their personal financial disclosure statements if the transaction amount exceeds $1,000.
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If Rep. Garcia timely disclosed the sale of his Boeing stock, he would have disclosed the sale by September 24, 2020, allowing the public to judge the transaction before Rep. Garcia’s 2020 election. Instead, Rep. Garcia waited to disclose the sale until after his election, meaning that voters were not aware of the sale until after they cast their ballots, depriving them of the ability to assess Rep. Garcia’s candidacy in light of his personal financial interests.
Failure to File Complete and Accurate Financial Disclosure Reports
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Rep. Garcia appears to have repeatedly filed inaccurate and incomplete PFDs for years. Candidates for federal office and Members of Congress are required to file annual personal financial disclosure reports with the Clerk of the House of Representatives.
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It appears that Rep. Garcia failed to disclose or incompletely disclosed the following assets and income on his annual personal financial disclosure reports, in violation of the law: Raytheon stock options, underlying assets in brokerage and 401(k) accounts, spousal income from Rebecca Rollins Interiors, and interest in privately-held companies
Click here to read the OCE complaint.
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