Commerce Secretary Wilbur Ross says he is selling off all his vast stock holdings after news reports raised questions about the timing of some of his stock transactions and he received a sharp reprimand from the chief federal ethics officer.
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But it’s not clear whether the sales by Ross, who before joining the Trump administration made billions investing in distressed companies, will be enough to satisfy ethics critics and end the episode.
Watchdog groups and some congressional Democrats are already calling for further government probes into his stock trades.
Ross disclosed late Thursday that he had received a letter from the Office of Government Ethics telling him to put his future financial paperwork in order.
The letter warned Ross that his failure to divest stocks he had pledged to sell in his original ethics agreement when he took office could have placed him in a position to run afoul of criminal conflict-of-interest law.
“He should have done it at the outset,” Richard Painter, who was the chief ethics lawyer for President George W. Bush, said of Ross’ stock sales. “He may have already violated the criminal conflict-of-interest” law.
A review by the Commerce Department’s ethics official found nothing to indicate legal violations by Ross, the letter from OGE Acting Director David Apol said. However, he added, “Your failure to divest created the potential for a serious criminal violation on your part and undermined public confidence.”
Ross said he made “inadvertent errors” in completing the required divestitures. Apol’s letter said the ethics agency has no information contradicting that.
But “to maintain the public trust, I have directed that all of my equity holdings be sold and the proceeds placed in U.S. Treasury securities,” Ross’ statement said. “I take my ethics obligations very seriously and am committed to serving the American people.”
His move to divest his stock holdings, however, may not be enough to put the matter to bed.
“He’s got some potential legal vulnerabilities,” said Virginia Canter, a White House lawyer in the Obama administration now at Citizens for Responsibility and Ethics in Washington. “I think it has to be looked at very closely. There’s a lot of roads that have yet to be pursued.”
CREW has asked the Justice Department and the Office of Government Ethics to investigate possible legal violations by Ross. The Commerce Department’s independent watchdog and the Securities and Exchange Commission may also have grounds to pursue investigations, Canter suggested.
Sen. Ron Wyden of Oregon, the senior Democrat on the Senate Finance Committee, said Friday that given the OGE’s letter, “the Justice Department should conduct a thorough investigation to ensure that Ross was working on behalf of all Americans and not just his own bank account.”
Spokesmen for Ross at the Commerce Department had no additional comment Friday.
As Commerce chief, Ross is President Donald Trump’s point man on trade and manufacturing.
Last month, he became the latest administration official dogged by ethics questions when news surfaced that he used a trading technique to profit if the stock in a shipping company with Russian-government ties fell, a transaction coming just days after he learned of a possible negative news story about his investment in the company.
Ross reported on a government form, as required by federal ethics rules, that he shorted stock in Navigator Holdings in October. The New York Times reported that the transaction came three business days after a Times reporter submitted questions to Ross about Navigator.
Ross rebuffed any suggestions that he used non-public information to make a profit, which would be considered insider trading. He said the transaction was part of his effort to divest from Navigator and that he didn’t stand to gain if the stock fell, or lose if it rose, at the time. Ross said he “technically” sold the stock short.
Customarily in short selling, a person borrows shares of a stock and sells them. The aim is to then replace the borrowed shares with others bought later at a lower price, reaping a profit from the difference.
Ross said his situation was different. He said he’d been in the process of selling off his holdings in Navigator when he learned in late October that there were additional shares belonging to him in an account opened by the company. Because the shares were “in electronic form” and he didn’t have physical access to them to deliver them to the broker on time, he said he “technically” sold them short.
When he received the physical shares on Nov. 16, Ross said he delivered them to the broker to close the transaction. “Therefore, it made no economic difference to me whether the shares went up or down between the sale date and the date I delivered them,” he said.
Last week, Ross told CNBC that he shorted shares of two other companies — Air Lease and Ocwen Financial — last year in the same way as the Navigator transaction.