If you were looking for reasons why members of Congress trading stocks can be a bad look, Rep. Doug Lamborn’s curious, aggressive trading style is a case-study in questionable behavior.
The Colorado congressman, who is under investigation for abusing his office, has for years exclusively bought and sold stock in one single company—a company that benefits from government contracts. And while his strategy is perfectly legal, it’s one that is risky for him, his re-election, and for Americans depending on the lawmaker’s decisions.
A review by The Daily Beast of Lamborn’s financial disclosures revealed that, for almost a decade, he and his wife have invested and traded in just one firm: the California-based cloud-services company NetApp Inc.
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The filings show it is the only firm represented in their individual retirement accounts, and the two buy and sell its shares frequently and aggressively, making a total of 75 transactions in the past 12 months—more than one every five days.
The sales come in bursts and flurries, with the two IRAs and Jean Lamborn’s Ameritrade Margin Account usually acquiring or dumping shares in similar amounts on the same day.
Lamborn’s office dismissed the notion that such an undiversified investment strategy exposes his savings to undue risk, asserting that the bulk of his retirement funds are held in a federal Thrift Savings Plan. The statement did not address trading by his wife, who appears to have no other source of income besides her job as his campaign bookkeeper—which netted her company $40,629 last year.
“Congressman Lamborn has faithfully followed all public financial disclosure requirements in his 15 years in Congress,” said spokeswoman Cassandra Sebastian. “As an elected official, Congressman Lamborn understands that his position is one of public trust, which is a duty that he takes very seriously.”
House disclosures do not usually include exact dollar values of any asset or transaction, but rather only report ranges. The Lamborns conducted 46 trades of stock or options in the range of $15,000 to $50,000 and 29 in the range of $1,000 to $15,000. That means the total value of all their transactions could total as much as $2,735,000.
The power couple’s financial dabblings stunned Professor Benjamin Edwards, a securities law expert and director of the Public Policy Clinic at the University of Nevada, Las Vegas.
“It is very common to sue stockbrokers if they overconcentrate a person's assets into a single company,” Edwards told The Daily Beast. “Normally it is a very bad decision to load all your money into a single company, because it exposes you to an enormous amount of risk.”
“It could be that he knows something, or has some reason to believe he knows something, that makes the risk seem different to him,” Edwards speculated.
The Lamborns’ trades broadly seem to follow rather than anticipate market trends, although it is impossible to see how the stock was performing at the exact time they purchased or sold it. Nonetheless, Edwards warned the singular focus of the Lamborns’ investments could affect the congressman’s capacity to fulfill his public duties.
"When you have a member of Congress with a concentrated investment in a particular company, it may cause them to think about how their votes and actions may impact their stock trading positions,” Edwards said. “And the more concentrated their assets are, the more that risk appears.”
Lamborn did not report holding NetApp stock when he first entered Congress 2007, though he acknowledged in a 2011 letter to the Committee on Ethics that he had for years failed to disclose the content of his and his wife’s IRAs, which he revealed both held NetApp stock. It was not until 2013 that the two began focusing all their private savings into the company.
Lamborn has served on the House Armed Services Committee since 2008, and since that time NetApp has received more than 30 contracts from the Department of Defense, some reaching into the six figures. The company’s stock price has more than doubled in the past five years.
Nonetheless, Lamborn insisted this represented no conflict of interest.
“He has never invested in individual energy or defense companies, even though that would be permissible under current law,” said Sebastian, his spokeswoman. “NetApp Inc. is not a defense company, nor has it ever been to his knowledge.”
In a statement to The Daily Beast, NetApp denied any history or relationship with Lamborn or his spouse.
“We aren't aware of any contact between anyone acting on NetApp’s behalf and Representative Lamborn or his wife,” a company spokeswoman said. “Our corporate policy prohibits sharing NetApp confidential information outside of the company.”
The controversy encircling the Lamborns does not, at this point, pertain to their stock dealings. Rather, an Office of Congressional Ethics report released last month detailed allegations that they had compelled government staffers to provide gifts and favors to them and their children. The matter has since passed to the House Committee on Ethics.
