Report flags 3 Minn. members of Congress for stock trading conflicts

·4 min read

Minnesota's Democratic U.S. Reps. Dean Phillips and Angie Craig and U.S. Sen. Tina Smith reported financial trades for themselves or involving family members over the past few years in companies that intersected with their congressional committees.

The New York Times analyzed Congress members' financial filings between 2019 and 2021 and found 97 current members "bought or sold stock, bonds or other financial assets that intersected with their congressional work or reported similar transactions by their spouse or a dependent child." Phillips, Craig and Smith were the only members of the Minnesota congressional delegation cited in the report.

Phillips reported trades in 276 companies, among which the Times identified 34 potential conflicts; Craig reported trades that one of her children made in 19 companies, with two flagged as potential conflicts; and Smith reported trades her husband made in four companies, three of which were deemed potential conflicts.

During Phillips' first term, he had trades in stocks and bonds of more than two dozen banking companies while serving on the House Financial Services Committee, according to the Times' analysis. Those included trades of Wells Fargo while his committee investigated the bank. He also sold shares of four other banks before their executives testified before his committee.

A spokesman for Phillips said the trades in question were made by the congressman's investment advisers without his knowledge. He chose to stop communicating with these advisers after announcing his congressional candidacy in 2017 — letting them act independently on his behalf — and began searching for a law firm to move his stocks into a blind trust after he was elected in 2018, the spokesman said.

Phillips, heir to the Phillips Distilling Co. liquor fortune, hired a law firm to move his stocks into a blind trust in January 2020. It took until July 2021 to transfer most of his assets because of legal and congressional requirements, the spokesman said. Assets from two additional trusts of which Phillips is the beneficiary are in the process of being moved to separate blind trusts pending approval from the U.S. House Committee on Ethics.

Phillips is one of five members of Congress who have opened or are in the process of opening a blind trust, according to the Times report.

"Rep. Phillips does not trade stocks, hasn't communicated with his investment advisers since announcing his candidacy in 2017 and proactively placed his assets in a blind trust after being sworn into Congress," spokesman Bryan Doyle said. "He is a co-sponsor of the TRUST in Congress Act, which would require all members of Congress to do the same."

Craig Holman, an ethics expert and government affairs lobbyist for the nonprofit watchdog group Public Citizen, said Phillips should have avoided the trades in the first place.

"It has every appearance that he would know where the investments are going, whether or not he is making those decisions," said Holman, whose group is pushing to ban members of Congress and their immediate family members from buying or selling stocks. "What any responsible member of Congress should do is just not play in the stock market. … This is a political liability for them."

Rep. Craig has also called for members of Congress and their spouses and children to be banned from owning or trading individual stocks; she sold her own individual stocks before being sworn into Congress in 2018, a spokeswoman said.

The Minnesota Democrat did not know her college-aged son was trading stocks in 2019 and reported his trades as soon as she became aware of them, Craig's spokeswoman said. His trades of shares in the companies Lyft and Ford came while Craig served on the House Committee on Transportation and Infrastructure. He used money his grandfather left him in his will and recorded small net losses on his trades, according to Craig's office.

"As a mom, I would be grateful if my college student son was not allowed to own or trade stocks. And as a member of Congress, I'm working to pass a law to force him to listen to his mother," Craig said in a statement.

Smith's husband, who has long invested in medical device companies, owned shares in two insulin equipment manufacturers when she joined the U.S. Senate in 2018, according to the Times. While in the Senate, Smith has pushed to make insulin more affordable. It isn't clear how cheaper insulin would affect those companies.

Her husband sold his shares in March 2020 as the pandemic began and most stocks plunged. Smith's spokesman said it was a "simple business decision."

"Like a lot of families, my husband, Archie, and I have two very different jobs — and we keep them completely separate," Smith said in a statement. "Archie's job is to invest in medical device companies, which he has done most of his career since we moved to Minnesota in 1984. I do not know about and have absolutely no role in any of his investment decisions."

Republican Party of Minnesota spokesman Nick Majerus criticized Smith, Craig and Phillips, saying in a statement that the Times report "raises serious questions about who they represent."