Sen. Richard Blumenthal (D-CT) joined his wife to buy and sell millions of dollars worth of stock in the company that operates the stock trading app Robinhood. At the same time, he pressed for Congressional investigations into the type of trading Robinhood was designed to facilitate.
Blumenthal has recently made legally required financial disclosures that show he and his wife sold somewhere between $1,265,000 and $2,550,000 in Robinhood stock during the last quarter of 2021.
During that period, he was part of a group of federal lawmakers calling for investigations in the company’s part in high-volume trading in so-called “meme stocks.” GameStop was primarily involved in the meme trading whirlwind facilitated by Robinhood.
Many smaller traders used the Robinhood trading platform to drive up the price of GameStop shares. The company then drew fire from traders and investors by blocking app users from selling GameStop shares when they wanted to.
Blumenthal backed away from pressing investigations of Robinhood, even though he was serving as the chair of the Senate Commerce Subcommittee on Consumer Protection.
Congressional stock trading has come under heightened scrutiny since Blumenthal’s Robinhood trades. There have been bipartisan proposals to sit lawmakers to regulate or ban stock trading. Even Speaker Nancy Pelosi, a very active stock trader, has supported a proposal to prohibit House members from trading stocks earlier this week.
In addition to concerns about possible conflicts of interest affecting Blumenthal because of his financial interest in Robinhood, it appears that he has violated federal law that requires disclosure of stock trades by senators within 45 days.
Blumenthal and his wife did not disclose one sale of Robinhood stock valued between $265,000 and $550,000 until 56 days after the transaction, on February 2. The senator’s investments in Robinhood appear to have been managed by his wife’s family. The fortune managed by his wife’s family leads Blumenthal to be considered one of the wealthiest senators.
Blumenthal and his wife purchased between $500,000 and $1,000,000 worth of Robinhood stock on February 1, 2021. Blumenthal acted the same day to call for investigations by Congress and watchdog groups into the meme stock trading frenzy. The highly complex structure of the Malkin investments makes it difficult to determine how much profit Blumenthal recognized on his Robinhood trades. One financial expert review believes the senator and his wife saw a profit of at least $500,000.
A spokesperson for Blumenthal said that he does not own any individual stocks, and his wife has no control over her investments, which are “primarily held in family trusts.” Blumenthal’s office has said that he is sometimes unaware of Malkin family investments and added that he was unaware that he owned an interest in a property development backed by the Chinese communist government.
Blumenthal has not yet supported lawmakers’ proposals to regulate stock trading.