AP: Allen Failed to Report Stock Options

Sen. George Allen, R-Va., speaks at the 2006 "Values Voter Summit" in Washington in this Sept. 22, 2006, file photo. (AP Photo/Kevin Wolf) (Kevin Wolf - AP)

"I actually got no money out of Xybernaut. I got paid in stock options which were worthless. Commonwealth Biotech asked me to be on their board. Glad to do it. I learned a lot on their board and enjoyed working with 'em, and they seem to be doing all right, I guess," Allen said.

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THE DISCLOSURE ISSUE

Allen's office said he did not report his Commonwealth options on his past five Senate disclosure reports because their purchase price was higher than the current market value. Allen viewed them as worthless and believed in "good faith" he did not have to report them, aides said.

Allen disclosed the options once _ on an amendment to his 2000 ethics report filed three months after the normal filing period ended. He excluded the options from subsequent reports.

When AP showed Allen's lawyer the Senate ethics manual requirement that such options must be reported each year regardless of value, the lawyer said he was unfamiliar with that provision. Allen has now asked the Senate ethics committee for an opinion on whether he should have disclosed them.

"While we continue to believe that we have disclosed more than is required, we will abide by the formal ruling of the committee," Allen spokesman John Reid said.

The disclosure requirements exist so the public can watch for potential conflicts of interest, and Allen had an obligation to report his Commonwealth stock options to Congress, two ethics experts said.

"As an ethical matter, it's irrelevant whether the exercise price of those stock options is above or below the current market price of the stock," said Kathleen Clark, a Washington University of St. Louis law professor, former prosecutor and former Democratic congressional aide.

"If he owns stock options, he does have such a financial stake, whether the exercise price is above or below current market value."

Lawyer Marc Elias, who represents Democrats in ethics cases, said the conflict issue is even clearer because Commonwealth gets federal contracts.

"Unlike some other controversies that have come up from time to time, this is a situation where the underlying asset is in a company that has business before Congress," Elias said.