Each year by May 15, members of the House and Senate are required to provide the public with insights into their personal finances. Yet, as Business Insider points out, the vast majority of Congress utilizes the provision to file an extension. This allowance grants them up to an additional 90 days, pushing the release date for most financial disclosures for this year to yesterday – August 15.
Here’s a quick guide to the basics of these reports:
What’s in a financial disclosure report?
Financial disclosure reports offer a transparent view of a public figure’s earned income, assets, liabilities, positions in business enterprises and other organizations, gifts, and reimbursements for Members of Congress. Such transparency is intended to allow constituents and voters to judge for themselves any potential issues related to their elected representatives’ financial activities.
Are there other disclosures to prevent these conflicts?
In response to concerns about insider trading, the Stop Trading on Congressional Knowledge (STOCK) Act was passed in 2012. It aims to prevent members of Congress and government employees from capitalizing on non-public information in stock trading. A noteworthy feature of this law mandates the prompt disclosure of individual stock transactions through Periodic Transaction Reports. As stipulated by the House Ethics Committee, these disclosures are due 30 days post awareness of the transaction or within 45 days from the transaction itself.
What kind of impact have these reports had?
Personal financial disclosures can be significant liabilities for candidates, especially those far wealthier than their average constituent. For example, Indiana Senator Evan Bayh returned to politics in 2016 after a stint in the private sector, where his wealth ballooned. Within his personal financial disclosure, which he delayed filing as long as possible, a reporter spotted a controversial investment vehicle, which was then reported on by The Huffington Post. This story and other similar reports turned out to be fatal to Bayh’s bid to return to the U.S. Senate.
How does Look Ahead Strategies utilize these reports?
Look Ahead Strategies’ team has experience reviewing thousands of these reports, and they remain an important resource for obtaining insights for our clients. They allow our team to analyze investments for conflicts of interest, hypocrisy, and questionable associations. Those filing their financial disclosures should take the time to do their own due diligence on their holdings so they can anticipate potential vulnerabilities or stories that may follow from their filings.