- Sen. Pat Toomey said Jan. 28 the GameStop stock surge “has all of the characteristics of a bubble.”
- Toomey’s son that same day sold GameStop stock for between $1,001 and $15,000, per financial disclosures.
- An ethics watchdog said while the trades are legal, “it sure doesn’t look good from the outside.”
- Visit the Business section of Insider for more stories.
A high ranking Republican senator’s son made a pair of GameStop stock trades as his father cautioned against any further regulation stemming from the Reddit-driven “short squeeze” fiasco, according to US Senate financial disclosure forms reviewed by Insider.
Sen. Pat Toomey’s college-aged son purchased up to $15,000 worth of GameStop stock on January 27, then sold it the next day for an amount between $1,001 and $15,000, the disclosures show.
It’s unclear whether Toomey’s son, Patrick Toomey III, made or lost money. GameStop stock traded between $249 and $380 per share on January 27 and $112.25 and $483 a share on January 28 as the the video game retailer’s share price oscillated wildly. The roughly $371 peak-to-trough price swing on January 28 marked the most volatile day in the stock’s history.
The transactions happened as the Pennsylvania GOP senator was publicly weighing in on a market craze that roiled Wall Street. On January 28, Toomey released a statement saying the rapid increase in GameStop’s stock price “has all of the characteristics of a bubble, and like all investment bubbles in history, this will end poorly for the people buying stock late.”
Toomey, who has already announced he’s retiring in 2022, also cautioned his fellow lawmakers against overreacting and moving for further regulation of the markets.
“When examining this episode, regulators and Congress should tread with extreme caution and avoid needlessly inserting themselves into equity markets,” Toomey said at the time.
Toomey later went on Fox News for an interview on Neil Cavuto’s more markets-focused show ahead of the closing bell on January 29 as the markets — and online trading platforms such as Robinhood — found themselves in turmoil.
“I do think we should understand why the brokers made the decision they made, several of them, including Robinhood to limit the ability of people to buy stock,” Toomey told Cavuto. “I think there’s a plausible explanation that has to do with the additional capital required when stocks are volatile.”
‘A classic bubble’
In a statement to Insider, Toomey said that his son made the GameStop trades without his knowledge. Had he known about them, he would have cautioned against getting on the GameStop train.
“Had my son asked for my advice about these trades, I would have told him the same thing I said in numerous print and television interviews: that it’s a classic bubble that will end badly for most participants,” Toomey said.
But Toomey also defended his son’s right to make the stock trades.
“These perfectly legal and non-controversial transactions were made by my adult son in his investment account that he controls exclusively,” Toomey said. “He used only public information that was widely available at the time. The trades were made without my knowledge. I disclosed these trades in the ordinary, monthly disclosure of my, and my family’s, trading activities, as required by Senate rules.”
In addition to GameStop stock, Toomey’s son sold shares of Shopify and Tesla in late January, according to the senator’s financial disclosure.
‘It sure doesn’t look good from the outside’
Members of Congress are generally required to publicly disclose their own stock trades — as well as those by their spouses and dependent children — within 30-to-45 days of a purchase or sale, depending on the kind of trade made. They are also only required to report those trades in broad ranges.
Other senators’ stock trades have attracted scrutiny in recent days.
Insider first reported that Sen. Gary Peters, a Michigan Democrat with a strong environmentalist streak, invested up to $15,000 in a power company that primarily burns fossil fuels.
Meanwhile, Sen. Dianne Feinstein, a California Democrat, failed to properly disclose an investment her husband made in College Reaction LLC, a private, youth-focused polling company that recently changed its name to The Generation Lab. Feinstein told the Secretary of the Senate that she’s willing to pay a fine for violating disclosure rules.
Dylan Hedtler-Gaudette, a government affairs manager for the Project on Government Oversight, an ethics watchdog group, told Insider the trades, while entirely legal, underscore the lack of regulation on members of Congress and their families trading stocks.
“He essentially warned against Congress doing anything to prevent this kind of thing from happening again at the same time that his son may have been profiting from the extreme fluctuation in the value of GameStop stock,” Hedtler-Gaudette said.
“This may have been entirely coincidental,” he added, “but it sure doesn’t look good from the outside, especially when the public already has a pretty negative view of Congress and views members of Congress as engaging in corrupt self-dealing as a matter of course.”
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