Tom Price's shady stock trades should disqualify him from HHS.

Tom Price Is the Walking Definition of an Appearance of Corruption

Tom Price Is the Walking Definition of an Appearance of Corruption

Moneybox
A blog about business and economics.
Jan. 17 2017 11:41 AM

Tom Price Is the Walking Definition of an Appearance of Corruption

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Dude is shameless.

Alex Wong/Getty Images

Here are some things we have learned recently about Georgia Rep. Tom Price, Donald Trump's pick to be secretary of health and human services.

Jordan Weissmann Jordan Weissmann

Jordan Weissmann is Slate’s senior business and economics correspondent.

First, the congressman has a habit of trading stocks in medical companies while also writing legislation that could sway those firms’ fortunes. The Wall Street Journal recently found that Price had “bought and sold stock in about 40 health-care, pharmaceutical and biomedical companies since 2012, including a dozen in the current congressional session.” In total, he traded shares worth $300,000. Price, a former orthopedic surgeon who now chairs the extremely powerful House Budget Committee, regularly introduces bills on health care policy and sits on the House subcommittee that oversees Medicare.

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Second, his investments have included at least one very nice bargain. In 2015 Price bought discounted stock in a small Australian biotech firm, Innate Immuno, that was attempting to win Food and Drug Administration approval for a new multiple sclerosis drug. Price purchased the stock in a private offering marketed only to “sophisticated U.S. investors” that Kaiser Health News referred to as a “sweetheart deal.” To be fair, all U.S. buyers received a 12 percent discount on their shares, which is reportedly standard in such a private placement. However, the stock price was also rising fast. Price has notched a 400 percent gain on the investment, Kaiser notes.

Finally, as CNN reported this weekend, Price introduced a bill that would assist a major medical device–maker less than a week after investing in it. Price bought between $1,001 and $15,000 in Zimmer Biomet, which manufacturers products like knee- and hip-replacement parts. Within days, he introduced the HIP Act, which would have delayed a new Obama administration regulation that may have crimped Zimmer Biomet's profits by changing the way Medicare paid for hip- and knee-replacement surgeries. After CNN's story was published, Price's aide told the news org that the congressman's stock broker had made the investment without his knowledge and that Price didn't become aware of the purchase until after introducing his bill. Nonetheless, “Price continued to hold about $2,000 worth of shares in the company, the source said, despite having introduced the bill that would have helped the firm just days earlier.”

Is Tom Price buying stocks based on the inside info he gleans as a congressman? I have no idea. Is Tom Price introducing legislation that he's aware might affect his own investments? I have no idea. Ideologically, the man is predisposed to oppose any sort of regulations that would cut into doctors' or medical device–makers' profits. I can't imagine he's writing bills and letters to regulators purely to goose his portfolio's returns. In any event, the Senate minority leader now wants the Office of Congressional Ethics to investigate whether Price violated the STOCK Act, which was passed in 2012 and was designed to stop insider trading by federal elected officials. We'll see if that yields anything.

But has Tom Price created the appearance of a massive conflict of interest by frequently trading stocks in companies whose bottom lines he might be able to influence as a member of Congress? Obviously. Could this have easily been avoided? Obviously. Assuming his official explanation about the Zimmer Biomet trade is true, he could have told his broker to avoid health care stocks. Or he could have just refrained from trading any individual stocks by investing his money in some diversified index funds (which is, frankly, what every member of Congress should be required to do). The fact that he did neither of those things means, at the very least, he wasn't worried about looking corrupt.

All of that should be enough to disqualify someone from a Cabinet post (doubly so if you're the sort of person who, say, thinks the Clinton Foundation was an unacceptable thicket of potential conflicts). But of course, it just means Price will fit in perfectly with the Trump administration.