NY GOP Smells Hypocrisy in Sen. Kirsten Gillibrand's Support for Ban on Insider Trading

On Tuesday, the New York Republican State Committee issued a press release blasting Sen. Kirsten Gillibrand (D-NY) for cosponsoring a ban on insider trading when her husband shorted housing stocks 34 times and made a “killing” during a period when she was “privy to inside information.”

The New York GOP press release reads in part:

When New York’s junior senator Kirsten Gillibrand (D-WFP) was a member of Congress – and privy to inside information on a plethora of topics – her husband “shorted” housing stocks at least 34 times , making a financial killing for the couple, as millions of Americans saw the value of their homes abruptly plummet. The Gillibrand’s timing in betting against the housing market was conspicuously perfect, the New York State Republican Party today noted.

Now, Senator Gillbrand is purporting to be a champion of reform against “insider trading” among members of Congress – using the issue to raise money for her re-election campaign.

A May 2010 article published by the Wall Street Journal confirmed that Sen. Gillibrand’s husband, Jonathan Gillibrand, did execute more than 250 transactions in options in 2008:

Almost all the trades were in put options, which convey the right to sell a stock or other instrument at a given price until a given date. At least 34 times, Mr. Gillibrand bought puts on stocks of home builders, including Beazer Homes USA Inc., Hovnanian Enterprises Inc., Meritage Homes Corp. and Ryland Group Inc. These were bets the builder stocks would fall; if they did, the puts’ value would rise.

Mr. Gillibrand also bought call options on ProShares UltraShort Real Estate. Although call options are bullish bets, this trade, too, was a bet against the property market, because the ProShares fund is designed to rise $2 for each $1 fall in real-estate stocks. His profit or loss couldn’t be determined.

Sen. Gillibrand’s spokesperson, Glen Caplin, fired back against New York State GOP Chairman Ed Cox:

Ed Cox is grasping at straws to recycle an old baseless political attack on a member of the Senator’s family that was as specious then as it is now. The fact is, Senator Gillibrand has been a leader on transparency and accountability in Congress as the first member ever to voluntarily post her official daily schedule, all earmark requests and her personal financial disclosure statement on her website.

On Monday, the Senate cleared the way to consider the insider trading ban, formerly known as the STOCK (Stop Trading On Congressional Knowledge) Act, in a 93-2 bipartisan procedural vote. The Senate is expected to vote on the insider trading legislation sometime this week.