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Rep. Tom Malinowski. (Photo: Kevin Sanders for New Jersey Globe)

Malinowski faces renewed questions over stock trades in wake of AP report

By Nikita Biryukov, May 21 2021 12:01 pm

Rep. Tom Malinowski is facing renewed questions over his failure to disclose stock trades made at the height of the pandemic potentially worth millions of dollars in the wake of an Associated Press report detailing trades the congressman made since early 2020.

The AP story, which already appears in news outlets across the nation, lists lucrative trades made by the congressman, including ones involving companies involved in developing virus tests, treatments and vaccines, and details his use of short sales.

Though short selling, a practice that sees traders sell borrowed stock in hopes they can return the stock later at a lower price, is not illegal, its use by elected officials can bring a worrying perception — that lawmakers are betting against the economy.

It’s not clear how many such trades the congressman made last year — the AP said a list of stock trades required to be filed by law is incomplete for 2020 — but a more recent disclosure shows he bought shorts worth between $62,000 and $230,000 this year.

The congressman has denied any wrongdoing, saying the trades were made by his broker and without his input, a point the New-York-based Gagnon Securities backed in a statement provided by Malinowski’s congressional office.

“Gagnon Securities make all trading decisions in discretionary client accounts, and does so based on publicly available information as well as proprietary analysis that forms our investment strategy for all our clients,” the firm said. “All trades referenced by AP that were made in Congressman Malinowski’s account in 2020, including all short positions, were made by Gagnon Securities pursuant to its discretionary authority and without Congressman Malinowski’s input or prior knowledge.”

But the renewed focus on Malinowski’s stock trades and his failure to disclose them for months or even a year, a failing the congressman has said was caused by an oversight, comes with the threat of political damage to one of New Jersey’s most vulnerable congressional Democrats.

Malinowski last year won re-election against State Senate Minority Leader Tom Kean (R-Westfield) by a little more than one point. The race took days to call, as late-arriving mail-in ballots thinned then nearly erased the lead early and heavily Democratic mail-in ballots afforded the congressman.

Kean is not seeking re-election to his state post this year and is widely expected to launch another run for the seventh congressional district’s House seat next year.

The congressman’s stock trades have drawn Republican attacks for months, and Friday’s AP report renewed that blitz.

“While American families and businesses struggled, Tom Malinowski used his official position to profit off the pandemic. Malinowski is a corrupt politician who cannot be trusted to do the right thing for New Jerseyans,” National Republican Congressional Committee spokeswoman Samantha Bullock said.

The story has clearly left Malinowski’s team is feeling pressed. His office in a statement denied he traded based on information available to him because of his position.

“The charge that Congressman Malinowski abused his office is categorically false,” his congressional office said in a statement. “The AP story acknowledges, ‘there is no indication that Malinowski acted on insider information to make his investment decisions.’ These trades were made solely by his broker based on publicly available information and without Congressman Malinowski’s input of prior knowledge.”

After Business Insider first reported the congressman’s absent stock disclosures in March, the congressman said he would move his securities into a blind trust, though that trust is still under review with the House Ethics Committee.

Rep. Mikie Sherrill (D-Montclair), who represents the neighboring 11th congressional district, began pulling out of individual stocks in January in favor of exchange-traded funds that tamp down on even the appearance of conflict.

Joining her clearly would have saved Malinowski some headaches.

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