Scrutiny over Malinowski stock trades to continue after ethics panel votes to extend investigation

A House ethics panel on Thursday extended its investigation into late stock trade disclosures filed by Rep. Tom Malinowksi (D-07).

Despite reminders from staff, Malinowski failed to comply with disclosure deadlines for hundreds of stock transactions made by the congressman’s broker between January 2019 and March 2021, when Business Insider first reported the tardiness of his disclosures.

Under the STOCK Act, members of congress are required to report securities transactions no more than 30 days after learning they were made and within 45 days of the transaction.

Gagnon Securities, Malinowski’s brokerage, told the Office of Congressional Ethics it sent monthly reports detailing Malinowski’s stock transactions to the congressman, who told a senior staff member not named in an OCE report on the matter that he would file periodic transaction disclosures on his own.

The congressman and senior staff have previously said the late disclosures were the result of an oversight and not out of a desire to hide trades that had the potential to cause him political damage, a position they held to after the OCE report’s release.

“The OCE’s report confirms what Congressman Malinowski has consistently stated: that his stock transactions were made solely by his broker, based on publicly available information, and were made without Congressman Malinowski’s input or prior knowledge,” Malinowski communications director Naree Ketudat said in a statement.

In interviews with the Office of Congressional Ethics, Malinowski acknowledged he would submit between two- and four-months’ worth of transactions at a time

“This was one of the things I knew I needed to do, and it was important to me to — to feel like I was disclosing what I needed to disclose to establish that there is nothing in my financial world that — that I was trying to hide, but I did not put enough pressure on myself to do it every 45 days, and that was — that was simply careless,” he told the OCE in June, according to a partial transcript included in the office’s report.

Disclosures filed by the congressman days after his interview with the OCE also included transactions that should have been reported earlier. The office has raised some concerns about the accuracy of the congressman’s filings, finding some transactions were improperly grouped or incorrectly dated.

It also found he failed to properly disclose some short sales, a practice that allows traders to sell borrowed stock with a promise of returning it later, hopefully at a lower price.

Malinowski moved to separate himself from his finances after the initial report about his tardy filings, and his blind trust was approved in July. The trust contained between $1.6 million and $3.9 million in assets at the time, according to trust formation documents filed with House officials.

He had ordered his broker to halt trades from his account in late May, while the trust was awaiting approval.

Ketudat said the House Ethics Committee’s extension did not reflect an escalation, adding the panel had not requested additional information from Malinowski since receiving the OCE report.

“Contrary to the partisan attacks, there is no allegation before the committee of any abuse of office. The only matter that has been recommended for review is a failure to properly file some of his disclosures, an oversight which he has always acknowledged, and fully corrected,” she said in the statement.

There were also some technical flubs. The OCE found Malinowski entered two years’ worth of transactions into the House’s Financial Disclosure Online Reporting System after press inquiries in early March but did not click a button that would have made the filings available to the public for a handful of days.

The congressman’s failure to disclose his stock transactions is likely to emerge as an issue in his re-election race next year. The late disclosures have spawned multiple ethics complaints from outside groups, and the National Republican Congressional Committee has launched digital ads attacking him over the issue.

Malinowski is among the state’s most vulnerable House incumbents. He narrowly won re-election last year against state Senate Minority Leader Tom Kean (R-Union) in a race where Malinowksi emerged with an early lead that thinned to just 5,311 votes — a little more than a single point — after late-arriving mail-in ballots and provisional votes were added to the total.

Kean did not seek re-election to the state Senate this year and announced in July he would again seek the 7th District seat. Rik Mehta, a Republican who unsuccessfully sought to oust Democratic U.S. Sen. Cory Booker in 2020, is also running.

The unforced errors have spawned some speculation that Democratic leaders would draw Malinowski into a more Republican district during this year’s reapportionment, though Democratic county chairs from the 7th District denied those rumors, calling them “categorically absurd.”