Topline
Rep. David Trone (D-Md.) sold between $450,007 and $1 million in bonds from major U.S. banks last month, shortly before the second- and third-largest bank failures in U.S. history stirred up turmoil in the nation’s banking sector, according to a new filing.
Rep. David Trone sold up to $1 million in bank fixed income securities last month.
Key Facts
Trone sold the fixed income securities from Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley and Wells Fargo on February 16.
That was roughly three weeks before confidence in the banking industry crashed as Silicon Valley Bank and Signature Bank failed and concerns mounted about how large banks’ involvement in the run largely targeting regional banks could spread the contagion.
Trone—who sits on Congress’ joint economic committee and the House appropriations committee—has no added “insight into the financial markets” from his committee membership and the transactions were “unaffected by the stock market’s behavior” and the bank collapses, Trone’s spokeswoman Sasha Galbreath said in an emailed statement to Forbes.
A “vast majority” of Trone’s holdings are “variable-rate notes, bonds, and other vehicles with fixed maturity dates, or ETFs and mutual fund-like securities,” Galbreath noted, adding that fund managers execute all transactions in his name.
It’s unknown what Trone’s return on investment was on the February bond sales or how much the securities would be worth now, but high inflation and interest rates have weighed heavily on the bond market.
It’s possible the newly disclosed sales were simply of notes that were held until maturity and offloaded at their predetermined expiration dates, or that Trone’s money manager acted on a hunch the subpar macroeconomic condition would cause his holdings to further lose value and sold bonds before expiration, a characterization Galbreath strongly denied.
(NOTE: This article previously incorrectly stated Trone’s last securities sales came in March 2020, which was the date of his last periodic transaction report. Trone reported numerous bond and other asset sales in his 2021 annual report.)
Key Background
First elected to Congress in 2018, Trone grew wealthy as the cofounder of Total Wine & Spirits, the self-proclaimed “largest independent retailer of fine wine” in the country, with 2022 sales of $5.5 billion. Quiver Quantitative, which tracks lawmakers’ investments, first reported on Trone’s recent sale. Members of Congress are allowed to trade stocks, bonds and other securities with little restriction other than a requirement to disclose any such transactions. A 2022 New York Times investigation found nearly 20% of Congress members either personally bought or sold securities from companies overlapping with their legislative activities, or a close relative did so (Trone was not implicated in the report).
What To Watch For
Lawmakers on both sides of the aisle have introduced legislation seeking to bar Congress members from trading in individual stocks, though past efforts have failed to gain much traction on the House or Senate floor.
Surprising Fact
Trone was one of 21 bipartisan Congress members who sent a March 12 letter to top-ranking federal financial policy makers urging the government to step in to guarantee all Silicon Valley Bank customers would get their deposits back. The letter noted the struggling bond market’s impact on Silicon Valley Bank’s failure: “With higher interest rates, the value of these long-term Treasury bonds and mortgage-backed securities declined precipitously.” Later that day, federal officials promised to safeguard all deposits at Silicon Valley Bank and Signature Bank, which failed two days later.
Further Reading
Stock Trades Reported by Nearly a Fifth of Congress Show Possible Conflicts (New York Times)
CORRECTION (3/22): This article has been updated to correct the frequency of Trone’s transactions.
