The art of the steal
Senator Jim Inhofe’s unbelievable stock market luck
Just days after signaling his support for unprecedented levels of US defense spending, Sen. James Inhofe (R-OK), the chairman of the Senate Armed Services Committee, reported purchasing tens of thousands of dollars of stock in one of the nation’s top defense contractors [Raytheon].
What’s worse? It was all legal.
According to government regulations, federal workers, including senators like Jim Inhofe, can invest in companies like Raytheon if the information they use to make such investments is in the public domain—which, in this case, it was. But to have the chairman of the Senate Armed Services Committee investing (and ultimately making) that kind of dough in such stock is bound to raise some eyebrows.
Ultimately, it was too hinky even for Inhofe—and that’s saying something. After the transaction came to light, his office said that Inhofe had instructed his financial adviser to cancel the purchase, and “to avoid defense and aerospace purchases going forward.”
Such a prince.
Keep in mind that Inhofe, who has been a senator since Nebuchadnezzar was in swaddling clothes, and been around K Street a couple hundred times, cancelled the transaction only after it was reported.
According to The Daily Beast, metadata in the document indicates it was created less than 20 minutes after the news organization reached out for comment.
So 20 minutes after being notified that a news organization had details of this transaction—a perfectly legal transaction, according to the senator’s office, which the senator also knew nothing about—Inhofe decided to gut the whole thing, even though everything he did was above board?
Someone just got caught with his hand inside a large defense and aerospace cookie jar.
Let’s get in the weeds here. According to reports, Inhofe’s financial adviser, Keith Goddard, bought between $50,000 and $100,000 worth of stock in Raytheon days after the senator signaled his intention to support the Trump administration’s decision to increase defense appropriations.
More from The Daily Beast:
Inhofe, who took over the top spot on Armed Services after the death of Sen. John McCain (R-AZ) in August, has repeatedly pressed President Donald Trump to dramatically scale up the Pentagon’s annual budget, which currently stands at $717 billion.
Remarkably, as mentioned, it’s not illegal for senators to invest in companies in which they have oversight responsibilities (like Inhofe did with Raytheon) as long as they don’t benefit from inside information.
More on that in a moment.
Inhofe’s portfolio is not in a blind trust. So while he doesn’t direct what’s bought and sold—we’ll have to take his word on that—he can see what holdings he has, which seems like a loophole big enough to drive one of Raytheon’s Global Patriot systems through. And his stock adviser should know which committee the senator chairs and which investments might benefit from such an arrangement.
“We have no way of knowing what kind of relationship Inhofe has with whoever is managing his money/trust and it’s wild to take it on good faith that he has some kind of puritanical, self-imposed barrier in place that prevents him from communicating in any way with his broker about his trades,” Alex Baumgart, a researcher at the Center for Responsive Politics, wrote in an email.
How much of your credulity do you want strained?
Even though Inhofe and his staff maintain he didn’t direct the Raytheon purchase and there was absolutely no impropriety, Inhofe wrote a letter to Goddard, first thanking him for managing his financial holdings, then explaining, “Because of my new position as Chairman of the Senate Armed Services Committee, it is important for me not to own or trade any defense or aerospace companies.” In the letter, he then instructs Goddard not to buy any more stock in such entities.
You mean such a letter wasn’t on file when Inhofe was simply a member of the Armed Services Committee and not its chairman? You mean a letter like this even has to be on file? You mean this isn’t the first time Inhofe has been in this predicament?
According to The Daily Beast, Inhofe is no stranger to buying and selling stock in companies with business before his committees.
Last year, Inhofe, through his financial adviser, bought stock in another Pentagon contractor, Fluor, according to Senate disclosure records. But he sold that stock in August, shortly before assuming the Armed Services Committee chairmanship.
So he held stock in Fluor while a member of the Armed Services committee, but felt holding it as chairman of that same committee was a line he would not cross?
Quite the distinction.
Inhofe has purchased or owned stock in other companies within his direct legislative purview in the past. From 2015 to 2017, he chaired the Senate Environment and Public Works Committee. At the time, he owned stakes in energy companies including Continental Resources and Newfield Exploration. Like his shares in Raytheon, those assets were held in the trust managed by his financial adviser.
This is the same trust, run by the same adviser, and concerning the same kind of curiously-timed investments—and Inhofe had nothing directly or indirectly to do with any of them?
So many coincidences, it’s astonishing.
What’s troubling here—scratch that, it’s all troubling—is that Inhofe knew back in August to sell his stock in Fluor because the perception stunk to high heaven, but still decided to go ahead with the Raytheon purchase last month? Only a cynic would say Inhofe was just trying to see if he could get away with it this time.
Call me a cynic.
Even if Inhofe didn’t directly authorize his agent to buy the Raytheon stock, why didn’t he send a letter prohibiting his broker from investing in it or any similar defense or aerospace contractor back in August?
As to the matter of stock information in the public domain, it all depends on what your definition of public is, what private is, and what information resides in the leather binders of those congressional aides who sit right behind Inhofe. The senator has access to documents and DOD projects and projections long before anyone else.
The senator’s office says there’s nothing to see here.
“The senator has had no involvement in and has not been consulted about his stock transactions,” [spokesperson Leacy] Burke said. “As such, the Senator was not aware of this stock purchase until it came through the system very early this morning.”
He was shocked—shocked, I tells ya—that Goddard bought defense-related stocks, even though Goddard bought such industry-related stock in the past.
None of this is going to jeopardize Inhofe’s standing as chairman, because for present-day Republicans, sucking off the public teat for personal gain is a feature of the party, not a bug.
Earlier this year, Representative Chris Collins was charged with insider trading related to shares of Australian biotechnology firm Innate Immunotherapeutics Ltd., as was his son and his son’s fiancée‘s father, after Collins allegedly tipped his son off about negative results from a clinical trial of a drug being developed by the company—information that, you probably guessed it, was not public.
You work in a deli, the theory goes, you get to bring home some salami at the end of the day. It’s that simple. Besides, it’s not like Inhofe shot a guy on 5th Avenue.
When he was named chairman of Armed Services, Inhofe said this:
“As Chairman, it will be my priority to address these threats while maintaining a staunch commitment to service members and their families, as well as continue the bipartisan tradition of rigorous accountability and oversight of the Defense Department.”
It’s the “rigorous accountability and oversight” that makes it art.
“I don’t even know what [my financial advisors] invest in,” he told CNN. “That’s the truth, and I know people don’t want to believe that. That is fine.”