Blumenthal Bought Robinhood Shares as He Called for Congress To Investigate GameStop Trading Frenzy

Senator failed to disclose trades within federally mandated window

Sen. Richard Blumenthal (D., Conn.) / AP
February 10, 2022

Sen. Richard Blumenthal (D., Conn.) and his wife bought and sold shares of the stock trading app Robinhood while he called for Congress to investigate a controversial trading practice largely carried out on the platform.

Blumenthal disclosed that he and his wife sold between $1,265,000 and $2,550,000 worth of shares of Robinhood in the last quarter of 2021. At the time, Blumenthal joined a chorus of lawmakers in calling for investigations into Robinhood's role in supporting a speculation frenzy involving shares of GameStop. Blumenthal did not probe the matter even though he was well positioned to do so as the chairman of the Senate Commerce Subcommittee on Consumer Protection.

Blumenthal's disclosures come amid debate on Capitol Hill over whether lawmakers and their spouses should be banned from trading stocks. Lawmakers from both parties have proposed bills to limit or outright ban stock trades. House Speaker Nancy Pelosi (D., Calif.), one of the most prolific stock traders in Congress, endorsed a proposal on Wednesday to ban members from trading stocks. Blumenthal has yet to sponsor any of the bills proposed in the Senate.

Robinhood drew the attention of congressional investigators for its role in last year's "meme stock" craze. Speculators used the platform to inflate the share price of GameStop. It drew further criticism for blocking users from closing out their positions in GameStop shares.

The stock trades raise concerns about more than conflicts of interest for Blumenthal. The senator also appears to have violated a federal law that requires members of Congress to disclose their stock trades within 45 days. The Blumenthals sold between $265,000 and $550,000 worth of Robinhood shares on Dec. 8 but did not disclose it until 56 days later, on Feb. 2. The investments were through a fund overseen by Blumenthal's in-laws, the Malkin family. Blumenthal is considered one of the wealthiest members of the Senate thanks mostly to his wife's fortune.

The Blumenthals, through the Malkin fund, purchased between $500,000 and $1,000,000 of Robinhood shares on Feb. 1, 2021, financial disclosures show. That same day, Blumenthal called on Congress and consumer protection groups to investigate the Robinhood-fueled stock craze. Two congressional committees ended up investigating the matter, though Blumenthal's Senate subcommittee on consumer protection was not one of them. The subcommittee oversees the Federal Trade Commission, which received hundreds of complaints about Robinhood.

Blumenthal's complex financial disclosures make it difficult to discern how much money he and his wife made from the Robinhood investment, though a review of their filings suggests a profit of at least $500,000.

Blumenthal's financial disclosures list between $750,000 and $1 million in a private equity entity called "A-RH-HOOD," an investment fund that pooled Robinhood shares before its initial public offering in July 2021. Blumenthal's disclosures of the sale of Robinhood shares late last year refer to "A-RH-HOOD" in footnotes for the transaction.

The Blumenthals sold between $1,265,000 and $2,550,000 in four transactions between Oct. 29 and Dec. 8., their financial disclosures show.

A spokeswoman for Blumenthal said the senator "owns no individual stocks and his wife has no influence or control over her assets, which are primarily held in family trusts."

A spokeswoman previously told the Washington Free Beacon that the senator is not always aware of trades made through the Malkin family investments. His office said last year that Blumenthal did not know he was invested in a Chinese state-backed property development project until contacted by the Free Beacon.

Update Feb. 10, 10:07 a.m.: This piece has been updated to include a quote from Blumenthal’s office.