US Senator Richard Blumenthal on Friday rebuked claims in a post on a conservative news site that he and his wife bought and sold shares in Robinhood as he called for an investigation into Robinhood’s trading app. shares for his role in GameStop’s shopping spree last year. .
“This article is ridiculous. I do not own any individual stock. I have never owned any of these stocks, Robinhood. I have never had any control or knowledge of Robinhood’s stock trading,” said the Connecticut Democrat to a reporter Friday after an event in Guilford.
A article published Thursday in the Washington Free Beacon, Blumenthal revealed that he and his wife “sold between $1,265,000 and $2,550,000 worth of Robinhood stock in the last quarter of 2021.”
Hearst Connecticut Media could not independently verify or refute the Washington Free Beacon’s information, including whether any trusts controlled by Blumenthal’s wife’s family bought or sold Robinhood stock.
Blumenthal is one of the wealthiest members of Congress. Most of his wealth comes from the family of his wife, Cynthia, who are from the Malkin family, with real estate in and around Manhattan that includes shares in the Empire State Building.
Based on public records, the senator’s wealth is reported by various publications at $80-105 million. But neither Richard Blumenthal nor Cynthia Blumenthal control investments in family trusts, sources said, including Malkin Holdings LLC and related entities listed in the senator’s annual financial disclosure forms.
Blumenthal’s reporting and response highlighted a problem that has arisen over the years in Blumenthal’s long political career.
Themis Klarides, the former Republican leader of the State House who is seeking to challenge Blumenthal for his US Senate seat, seized on the Washington Free Beacon article, saying in a post Thursday on his Twitter page: “Blumenthal sold millions of shares of Robinhood as he called for an investigation into the trading platform – a clear conflict of interest.”
“Elected officials should not be allowed to use inside information for financial gain – we need to pass the STOCK Act now,” she added.
The Stop Trading on Congressional Knowledge Act, or STOCK Act, was passed in 2012. It states that members of Congress and other government employees cannot engage in securities trading based on information that they learned in the course of their work. It requires timely disclosure of stock market transactions.
The Free Beacon story makes no accusations of insider trading by Blumenthal.
Blumenthal said Friday he “strongly supports” the STOCK Act and stronger legislation that would “absolutely prohibit” members of Congress from owning or trading stocks.
The GameStop frenzy was one of the most bizarre events in recent Wall Street history.
On January 27, 2021, shares of struggling video game retailer GameStop soared thanks in part to a group on the Reddit site called “WallStreetBets”. Members of the group began encouraging each other to buy GameStop stock in an attempt to force huge losses on hedge funds that had bet the company’s stock price would plummet.
The day after the trading frenzy, Robinhood abruptly halted trading in some meme stocks, stocks of companies suddenly gaining internet popularity, citing Wall Street rules and insufficient liquidity, among other reasons.
It sent shares of GameStop and other companies plummeting, prompting lawsuits, congressional hearings, and a Securities and Exchange Commission investigation. Blumenthal asked for an investigation by consumer protection officials and Congress on Feb. 1 — and said legislative reform was needed.
Republicans and Democrats have called for updates to the STOCK Act. House Speaker Nancy Pelosi, a Democrat who had opposed the idea, recently gave the green light to a plan that would prohibit members of Congress from trading in stocks.
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