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Wilbur Ross shorted more stocks than previously reported

The Commerce secretary is under fire for five sales, three of which involved a shipping company with alleged ties to the Kremlin.

Secretary of Commerce Wilbur Ross. CREDIT: Win McNamee/Getty Images
Secretary of Commerce Wilbur Ross. CREDIT: Win McNamee/Getty Images

Commerce Secretary Wilbur Ross revealed to CNBC Monday that he shorted two more stocks while in office, in addition to the short sale of three other stocks Forbes previously reported in June.

Ross defended the newly disclosed May 2017 sales — which involved stock belonging to Air Lease and Ocwen Financial Corporation — by echoing his earlier comments about the three other shorts. He excused those sales as part of an effort to divest himself from any financial holdings that could pose a potential conflict of interest.

Monday, Ross told CNBC that in all five sales, his stake in the companies was zeroed out and he received no profit or loss on the trades. “These transactions are not profit-seeking short sales,” Ross said. “These shorts are technical ways of disposing the stocks.”

While Ross claims he was simply doing the right thing by divesting his assets, the action still raises a few red flags.

Richard Painter, former chief White House ethics lawyer under President George W. Bush, said Monday that he had “never heard of someone using short positions to divest.”

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“I helped in hundreds of transactions for employees entering government, this is not an acceptable situation,” he said.

Government watchdog group Citizens for Responsibility and Ethics in Washington (CREW) also thought the move was suspect, filing complaints with the Department of Justice (DOJ) and the Office of Government Ethics (OGE) in late June requesting an investigation into whether Ross violated the STOCK Act or other insider trading laws.

The STOCK Act prohibits executive branch employees like Cabinet members from using “nonpublic information derived from such person’s position as an executive branch employee or gained from the performance of such person’s official responsibilities as a means for making a private profit.”

CREW is particularly interested in the first three short sales with which Ross was involved. In late October, a New York Times reporter emailed Ross a list of questions regarding his investment in Navigator Holdings, a shipping firm with connections to associates of Russian president Vladimir Putin.

According to the Times and OGE filings, Ross subsequently “opened a short position” three business days after receiving the email and shorted the stock five days before the Times could report his connection to the company, positioning himself to make money when Navigator Holdings shares inevitably dropped. As the Times noted last month, Navigator stock prices did indeed fall approximately 4 percent before Mr. Ross closed his position on November 16 — “eleven days after the articles were published.”

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There is also evidence Ross may have made false or fraudulent statements to OGE when he submitted a sworn statement to federal officials that same month, saying he divested of all his holdings, even though he still held more than $10 million-worth of stock in his former employer, a financial firm called Invesco. He also held a short position in a bank called Sun Bancorp, from which he had promised to divest before taking a position at the White House.

A month later, he got rid of his interests in both companies.

That a member of the Trump administration has shady financial holdings should come as no surprise, considering the president has extensive conflicts of interest and continues to profit off of the presidency. Although the president claims he has little to do with the daily operations of his businesses, he maintains stake in all of them; when groups who may want to curry favor with the president pay thousands to host an event at his Washington, D.C. hotel, for instance, the president profits as well.

Ross is far from the only Trump associate run into trouble over questionable stock market transactions. Billionaire investor and longtime Trump confidant Carl Icahn dumped $31.3 million of stock in a company heavily dependent on steel, just days before Trump announced plans to impose steep tariffs on steel imports.

Icahn defended himself later, claiming he had no knowledge of the tariffs when he made the sale.