Rep. Michael McCaul (R-TX) disclosed a sell-off worth thousands of dollars in Meta stock before shares of the tech giant plummeted in value, filings show.
McCaul, one of the most active stock trade filers in Congress, disclosed on Oct. 14 that in September, accounts owned by his wife and child sold between $61,000 and $215,000 combined of Meta, the multinational tech conglomerate that owns Facebook. But only two weeks later, on Thursday, Meta shares took a nosedive by over $700 billion, or 24%, after the company reported earnings that skirted investor expectations.
“Congressman McCaul did not purchase these stocks,” Elliot Berke, a lawyer for McCaul, told the Washington Examiner. “Rather, his wife has assets she solely owns, and a third-party manager made the purchase without her direction.”
But the timing of McCaul’s Meta sell-off “looks bad,” according to Dylan Hedtler-Gaudette, the government affairs manager for the nonpartisan Project on Government Oversight.
“It is entirely possible that the timing is coincidental, but one of the major issues with members of Congress trading stocks is that the American people are just less and less likely to give the benefit of the doubt,” he told the Washington Examiner. “You can understand why an average retail investor who took a financial hit on their own Meta stocks might be suspicious that their member of Congress just so happened to be able to avoid similar losses.”
Meta’s shares on Thursday fell to their lowest price since 2016, according to historical stock data. The tumble, which Wall Street analysts dubbed a “train wreck,” comes almost one year after the company’s CEO, Mark Zuckerberg, changed its name from Facebook to encapsulate its foray into “metaverse” technology. The company has invested heavily in augmented reality and virtual reality.
About 13% of Zuckerberg’s wealth is tied up in Meta, and the CEO has lost around $100 billion in net worth because of Meta’s value decrease in the last 13 months, according to the Bloomberg Billionaires Index. Reality Labs, the group working to expand metaverse technology for Zuckerberg’s company, cost Meta $3.7 billion in the last quarter, and losses are expected to surge next year, said Meta Chief Financial Officer David Wehner in October.
Craig Holman, a government affairs lobbyist for the left-leaning think tank Public Citizen, told the Washington Examiner that McCaul’s Meta sell-off disclosure is “astounding behavior,” given that he is in a key position to “glean insider information on events that will affect the stock market.”
“Whether he used such insider information to sell off Meta stock before the crash, or if it was just sheer luck, we cannot know,” said Holman. “However, it has every appearance of insider trading and thus poses a significant political liability for McCaul.”
McCaul reported only three weeks before his family’s Meta sell-off that his spouse and child in August offloaded between $300,000 and $750,000 combined in Meta stock. In total, he has disclosed up to $4.89 million worth in Meta trades since Jan. 2020, records show.
CLICK HERE TO READ MORE FROM THE WASHINGTON EXAMINER
In September, McCaul was featured in a lengthy New York Times report detailing alleged conflicts of interest among 97 members of Congress who disclosed stock trades in companies they may have key insight into because of their congressional committee assignments. This includes trades of Alphabet, Meta, Microsoft, and IBM while he sits on the House’s Homeland Security Committee.
Also in September, House Democrats introduced legislation that would ban members of Congress from trading stocks. But one provision in that legislation permits the federal government to authorize blind trusts for members and has drawn criticism from ethics experts.
“Congress has a serious trust problem,” Joshua Graham Lynn, the CEO of the anti-corruption watchdog RepresentUs, told the Washington Examiner. “And until our elected officials get serious about cracking down on real or perceived conflicts of interest, the crisis of confidence will only get worse.”
