Capitol Assets
The Washington Post examines the intersection between the personal finances of lawmakers and their professional duties. View the series.
In the spring of 2009, investigators for the Senate Commerce Committee began looking into complaints about deceptive billing practices on the Internet.
Before the results of the probe became public in a hearing that fall, four members of Congress reported selling all of their stock in one of about 90 companies under scrutiny, the nation’s largest video game retailer, GameStop.
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At least 34 members of Congress recast their financial portfolios following phone calls or meetings with high-ranking Treasury and Fed officials during the economic crisis.
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One of the lawmakers, Sen. Johnny Isakson (R-Ga.), was a member of the committee. The other three were Rep. Michael McCaul (R-Tex.), Rep. Lamar Smith (R-Tex.) and Sen. James Webb (D-Va.).
The Washington Post identified the stock sales as part of an ongoing examination of the intersection of the personal finances and professional roles of lawmakers. Congress forbids administrative officials from trading in companies that appear before them and requires federal judges to recuse themselves from cases involving companies whose stock they own.
Members of Congress, however, have created ethics rules that allow themselves to invest in companies that have interests before their committees.
In an interview, Isakson said the timing of his GameStop trades and the investigation was coincidental. He said he was “not engaged at all” in his stock portfolio, which is handled by a professional manager. He said he had no conflict, because he was unaware of the committee investigation at the time, did not attend the hearing and has no memory of the issue.
“I’m not embarrassed about anything,” Isakson said. “I’ve always believed in total transparency, which is why you’ve got all the information you’ve got.”
Isakson’s investment manager, James C. Hansberger of Morgan Stanley Smith Barney, said the senator had not provided any guidance to him about buying or selling the stock.
“Senator Isakson and I have never discussed the company or the stock, GameStop,” Hansberger said in a written statement released by the senator’s office.
The Senate investigation focused on billing complaints from consumers who alleged that online stores were passing their credit card numbers to shopping clubs they did not realize they had joined.
On May 27, 2009, the committee issued a news release announcing the inquiry, naming the shopping clubs but not GameStop. It received little notice.
At the time, Isakson owned between $50,000 and $100,000 worth of GameStop stock. He had purchased it two months earlier for about $27 a share, according to his financial disclosure form.
On June 18, Isakson sold all of his stock in GameStop for about $23 a share. He sold the stock after holding it for less than three months. The other three stocks that he had bought in March he held for longer periods, an average of eight months.
Smith, who had owned the stock since January 2008, sold off shares worth between $1,000 and $15,000 on May 27. In July and October, Smith also sold off all his shares, worth between $3,000 and $45,000, in two other companies being looked at by the Commerce Committee — Pizza Hut’s parent company and Avis Budget Group.
Smith said the trades posed no conflict, because they were handled by his investment advisers without his input.
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