Conflict of Interest? Congress Members Who Condemn Facebook Have Also Invested in It

By B.N. Frank

Unless you’ve been completely avoiding the news, you are probably aware that Facebook has been criticized for a variety of unethical and unsavory business practices particularly the ones that affect children.  Earlier this year, 44 Attorneys General and several non-profit groups asked Facebook to NOT create an Instagram page for kids 13 and under.  Due to increasing pressure, in September, the company finally agreed to pause launching it.  Of course, much more has been revealed since then about how Facebook targets children and how the medium affects their mental health.  Nevertheless, the company makes A LOT of money and apparently it’s not illegal for elected officials or their family members to invest in it.

From MSN:

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Members of Congress publicly blast Facebook but quietly invest their savings in the social-media giant

• Insider counted 31 lawmakers holding Facebook stock in 2020.
• Congressional Democrats investing in the social-media giant are among its public critics.
• At least 155 members of Congress held stocks in major news and social media companies.

House Speaker Nancy Pelosi called Facebook shameful and irresponsible. Sen. Ron Wyden of Oregon suggested prison time for the tech giant’s CEO, Mark Zuckerberg. Rep. Ro Khanna of California said Facebook should be broken up.

But despite their tough talk toward the social-media behemoth, all three of those Democratic lawmakers or their spouses stood to gain financially from Facebook.

They were among at least 31 lawmakers in the House and Senate — 18 Democrats and 13 Republicans — whose families held investments in the tech company during 2020, according to an Insider investigation of lawmakers’ most recent financial disclosures.

The House speaker is also one of at least 155 Capitol Hill lawmakers, their spouses, or their dependent children who in 2020 held stock in major news companies, television networks, or entertainment conglomerates with significant news holdings, Insider’s investigation found.

Some of those lawmakers — such as Pelosi — are influential enough to move markets with a stray comment at a press conference. Others sit on powerful committees tasked with overseeing the very companies from which they stand to profit.

These investments also underscore an uncomfortable truth about Congress: While many lawmakers love to publicly bash news-media and social-media corporations, some quietly tie their personal wealth to such companies.

The analysis of media investments is part of the exhaustive Conflicted Congress project, in which Insider reviewed nearly 9,000 financial-disclosure reports for every sitting lawmaker and their top-ranking staffers.

Facebook and Pelosi

Pelosi reported that her husband, the investor Paul Pelosi, exercised stock options and purchased 5,000 shares of Facebook on January 16, 2020, for a total value between $500,000 and $1 million. His stock options in the company were set to expire the next day.

Paul Pelosi purchased 3,000 shares at a price of $140 and another 2,000 shares at a price of $150, a certified financial disclosure showed. He bought the shares, totaling $720,000, using stock options, which allow investors to purchase stocks at a fixed price below the market rate. Facebook’s stock closed at $221.77 that day.

The day of that purchase, Nancy Pelosi criticized Facebook during a press conference. She called the company “shameful” and accused it of “irresponsible” behavior as it was under scrutiny for the spread of misinformation of its platform. “The Facebook business model is strictly to make money,” she told reporters. “They don’t care about the impact on children. They don’t care about truth. They don’t care about where this is all coming from.”

Paul Pelosi later sold 5,000 shares of Facebook on May 8, 2020, when the company’s stock was trading at a low of $210.85, which meant the sale was for over $1 million. He contributed another 5,000 shares of Facebook stock to The Paul & Nancy Pelosi Charitable Foundation in August 2020.

Nancy Pelosi’s office drew a distinction between Pelosi’s own personal finances and those of her husband.

The House speaker “does not own any stocks,” her deputy chief of staff, Drew Hammill, told Insider. “As you can see from the required disclosures, with which the speaker fully cooperates, these transactions are marked ‘SP’ for spouse,” he added. “The speaker has no prior knowledge or subsequent involvement in any transactions.”

Pelosi represents parts of San Francisco, where Facebook has offices.

Federal law, bolstered by the Stop Trading on Congressional Knowledge Act of 2012, requires congressional lawmakers to disclose their financial trades, as well as those of their spouses and dependent children, because of the potential for conflicts of interest.

But the law isn’t adequate, some government-reform advocates say.

“Members of the public don’t always get the full picture of what members of Congress might have conflicts of interest related to until long after a hearing or after a bill passes,” Delaney Marsco, the senior counsel for ethics at the Campaign Legal Center, said.

Because the STOCK Act “is weakly enforced and does not have very punitive penalties … we often are not in real time given the information we might want to have about conflicts of interest,” Marsco said.

Investors on influential committees

Wyden, a senior Senate Democrat, suggested in 2019 that Zuckerberg face a prison term over Facebook’s privacy lapses.

Wyden’s wife, the Strand Bookstore owner Nancy Wyden, owned between $100,000 and $250,000 in Facebook stock in 2020, according to the senator’s disclosure.

“Senator Wyden and his wife keep their finances separate, so they do not discuss Mrs. Wyden’s investments,” Nicole L’Esperance, the senator’s spokesperson, said in an email. Wyden “has proposed several bills on everything from taxes to consumer privacy that would cost Mark Zuckerberg and Facebook billions of dollars, and go directly at the company’s business model,” she added.

Khanna, who represents Silicon Valley and serves on the House Oversight and Reform Committee, thinks Facebook should be forced to split with Instagram and WhatsApp to foster more competition, he told Bloomberg earlier this year. His wife, Ritu Khanna, owned between $100,000 and $200,000 in Facebook stock in 2020, records showed.

“I do not trade in any stocks, and certainly not any tech stock,” Khanna told Insider in a statement. He added that he was a cosponsor of legislation that would bar members of Congress from buying or selling individual stocks or other investments while in office. “My wife has assets prior to marriage which are legally not mine, and it’s not my place to tell her what to do with her separate assets,” he said.

Khanna’s wife purchased between $15,000 and $50,000 worth of stock in Meta Platforms — the newly established parent company of Facebook and Instagram — as recently as November 2, federal records indicated. Seven days later, on November 9, she sold $15,000 to $50,000 worth of Meta Platforms stock. (Lawmakers are required to report the values of such investments only in broad ranges.)

Facebook has dozens of other investors serving in the US House.

Rep. Jackie Speier, another California Democrat serving on the House Oversight and Reform Committee, told Vox in a 2020 interview that Facebook gave “license to persons that engage in misogynistic and hate speech.” Speier reported owning between $15,000 and $50,000 in Facebook stock last year. Speier’s San Francisco Bay area district includes Facebook’s corporate headquarters in Menlo Park.

Prominent House Republicans also held Facebook stock in 2020, including Rep. Marjorie Taylor Greene of Georgia and Rep. James Comer of Oklahoma, the top Republican on the House Oversight and Reform Committee. Greene and her husband continued to trade Facebook and other stocks — including those of companies whose corporate social policies conflicted with Greene’s political pronouncements — throughout 2021.

Two senators who held Facebook stock in 2020 — Democrat John Hickenlooper of Colorado and Republican Jerry Moran of Kansas — are members of the Senate Commerce, Science, and Transportation Committee. Facebook whistleblower Frances Haugen appeared before that panel on October 4, 2021, accusing the company of knowingly harming children and advancing misinformation.

The Colorado senator last year reported holding between $250,000 and $500,000 in Facebook stock. At the October hearing, Hickenlooper asked Haugen how it would affect Facebook’s bottom line if the “algorithm was changed to promote safety and to change to save the lives of young women, rather than putting them at risk.” He added, “Obviously, I think the Facebook business model — it poses risk to youth and to teens.”

On October 27, 2021, Hickenlooper sold all of his Facebook stock, which was worth up to $500,000, according to a federal financial disclosure he filed on December 10. It is unclear whether the senator made or lost money on his Facebook investment.

Moran also questioned Haugen at the October hearing, asking her, “What regulations or legal actions by Congress or by administrative action do you think would have the most consequence or be feared most by Facebook, Instagram, or allied companies?”

He held between $1,000 and $15,000 in Facebook stock last year, his disclosure showed.

Sen. Sheldon Whitehouse, a Democrat from Rhode Island, was among the members of the Senate Judiciary Committee who questioned Zuckerberg during a November 2020 hearing, where Whitehouse urged the CEO to “make sure that real voices are what are heard on Facebook.”

Whitehouse owned between $15,000 and $50,000 in the company’s stock last year.

The Rhode Island senator “does not buy or sell stocks and is not informed by account advisers of trades made in family accounts,” his spokesman Richard Davidson said in a statement. “Trades made in the senator’s family accounts are conducted independently by a financial advisor without any input from the senator.”

Facebook is a lobbying juggernaut that spends heavily to influence how the federal government acts. Last year, the social-media firm spent nearly $20 million to lobby the federal government, according to data compiled by OpenSecrets, which made it one of the top lobbying spenders in the nation that year.

Ethics advocates say the system of stock disclosures is broken.

“It’s essentially the fox watching the hen house,” Jordan Libowitz, the communications director for the watchdog group Citizens for Responsibility and Ethics in Washington, said.

“How are members supposed to do their jobs if when they’re doing what’s best for America, it might hurt their bottom line? It would be great if everyone put their personal assets in blind trusts, but at the very least, members of Congress should be prohibited from buying or selling stocks while in Congress.”

Twitter — and Trump

Twitter — another social-media company that has drawn intense scrutiny on Capitol Hill in recent years — has a handful of investors in Congress, disclosures showed.

Hickenlooper’s wife, Robin Hickenlooper, owned between $15,000 and $50,000 in Twitter stock in 2020.

Four other Democratic members of Congress or their spouses were also invested in the social-media company last year. Patricia Garamendi, the wife of Democratic Rep. John Garamendi of California, held between $1,000 and $15,000 in Twitter stock.

Democratic Reps. Josh Gottheimer of New Jersey, Susie Lee of Nevada, and Dean Phillips of Minnesota also held Twitter stock in 2020. Phillips announced earlier this year that he was transferring millions of dollars of assets into a blind trust.

Stock in the new social-media company led by former President Donald Trump has also recently attracted a couple of congressional investors, including Greene, who purchased up to $50,000 worth of shares in Digital World Acquisition Corp. on October 22, according to federal records.

Three days later, on October 25, Rep. Larry Bucshon, a Republican from Indiana, purchased up to $15,000 worth of stock in Digital World Acquisition Corp., a special-purpose acquisition company that’s teaming up with the Trump Media & Technology Group Corp. to fund Trump’s yet-to-be-launched social-media platform, Truth Social.

The deal is rife with political overtones.

Sen. Elizabeth Warren, a Democrat from Massachusetts, in November asked the Securities and Exchange Commission to investigate whether Digital World Acquisition Corp. committed securities violations when the SPAC announced its plans to merge with Trump’s company. The former president lashed out at regulators this month after the Securities and Exchange Commission and Financial Industry Regulatory Authority launched an investigation into the merger.

And Rep. Devin Nunes, a Republican from California, announced in December that he was quitting Congress to become the CEO of Trump’s media company.

Lawmakers invest in familiar media outlets

Members of Congress also held stocks last year in newspapers and television networks that covered them.

Republican Rep. Mo Brooks of Alabama owned between $1,000 and $15,000 in Lee Enterprises stock. The media company has a sizable newspaper portfolio that includes The Buffalo News in New York, the Tulsa World in Oklahoma, and the Richmond Times-Dispatch in Virginia.

It also owns two local-news outlets in Alabama: the Dothan Eagle and Opelika-Auburn News. Both of those outlets regularly cover the Alabama congressman who’s now running for the US Senate.

Two first-term millennials serving in the US House — Democrat Sara Jacobs of California and Republican Peter Meijer of Michigan — were the only two lawmakers who reported investments in The New York Times Co. in 2020, the year before they were sworn in to Congress.

Only one lawmakers — Republican Sen. Tommy Tuberville of Alabama — reported an investment in Fox Corp. the parent of Fox Broadcasting Co. Tuberville valued the holding at less than $1,001. Tuberville was elected to the Senate in 2020 and inaugurated in 2021.

Khanna recently disclosed the August 2021 purchase of up to $15,000 in Fox stock for one of his dependent children.

Republican Rep. Ashley Hinson of Iowa reported that her husband, Matthew Arenholz, owned between $1,000 and $15,000 of stock in the Atlanta television broadcasting company Gray Television. Hinson was a TV-news anchor for KCRG-TV in Cedar Rapids, Iowa, before her congressional election. Hinson in April told the Telegraph Herald in Dubuque, Iowa, that she and her husband would sell all of their publicly traded stocks.

Republican Rep. John Rutherford of Florida owned between $1,000 and $15,000 worth of shares in the media company Thomson Reuters.

Some of the most popular news-media-related stocks held by members of Congress are The Walt Disney Co., AT&T, and Comcast. Those megacompanies own — or owned at the time of the trade — influential news outlets, including ABC, CNN, and NBC, respectively.

Pelosi’s husband, Paul, held stocks in all three of them in 2020, the House speaker’s disclosures showed. In December 2020, he purchased 100 Disney stock options — which allowed him to buy them at a previously fixed rate — with a total value between $500,000 and $1 million.

At least 45 members of the House and Senate owned shares in Disney last year, Insider’s investigation showed, which made it the most popular media stock among members of Congress. At least 31 owned stock in AT&T, and at least 26 held shares in Comcast.

Read the original article on Business Insider

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Activist Post reports regularly about Facebook and unsafe technology.  For more information visit our archives and the following websites.

Image: Pixabay

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