Democratic Rep. Jamie Raskin failed to properly report a massive stock holding and payout for his wife — a Biden banking regulator nominee

• Biden nominated Sarah Bloom Raskin as the Fed's vice chairwoman of supervision.
• Her husband's paperwork shows the couple failed to properly disclose large holdings in Reserve Trust, a fintech company.

Democratic Rep. Jamie Raskin of Maryland violated a federal conflict-of-interest law by failing to properly disclose stock shares his wife received for advising a Colorado-based financial technology trust company.

The congressman likewise disclosed information about the sale of Reserve Trust stock eight months after Sarah Bloom Raskin dumped the stock in late 2020 for $1.5 million, an Insider analysis of federal records indicates.

This violation of the Stop Trading on Congressional Knowledge Act's disclosure provisions, which exist to promote transparency and defend against financial conflicts, comes at a time of significant national attention for the Raskins.

Jamie Raskin, who acknowledged he was late filing the portion of the disclosure about the sale and said it happened because of his son's death, is a prominent congressman who led the second impeachment trial of former President Donald Trump. Sarah Bloom Raskin is President Joe Biden's nominee to fill the position of the government's most powerful banking regulator and faced a key Senate panel on Thursday.

If confirmed, Sarah Bloom Raskin would become vice chairwoman of supervision at the Federal Reserve, after having held top-level jobs at the US Treasury and the Fed during the Obama administration.

Yet she faces an uncertain confirmation path among Republicans and conservative Democrats in a narrowly divided Senate given that she has called for harsher financial regulations aimed at combating the climate crisis and supports tougher oversight on big banks.

The omission from congressional reports of the shares she held in Reserve Trust is likely to hand another round of ammunition to Republicans, who want to stall Biden's nominees. At least one conservative watchdog group is already questioning whether she used her past Fed connections to help the fintech trust, and Sen. Cynthia Lummis, a Republican of Wyoming, brought it up during Thursday's hearing.

In 2018, while Sarah Bloom Raskin sat on the advisory board, the Fed granted Reserve Trust unusual access to its master account — an enviable get that allows the fintech company to move money for customers without relying on banks.

It's not clear when Sarah Bloom Raskin first acquired Reserve Trust shares. Jamie Raskin's office wouldn't say, and the White House only confirmed that Reserve Trust gave her the shares as compensation for her work with the company.

A Republican familiar with the materials Sarah Bloom Raskin disclosed to the Banking Committee, who spoke on condition of anonymity because that person wasn't authorized to discuss the matter publicly, said the Fed nominee told them she acquired the stocks when she joined the board in 2017.

Ethics rules say that members of Congress have to report assets for themselves and their spouses every year if the assets are valued at more than $1,000. But Jamie Raskin didn't report the Reserve Trust holdings to the Clerk of the House in his annual reports representing 2017 to 2019, the years his wife served on the board.

Because the STOCK Act says that such assets from a member of Congress or a spouse have to be disclosed annually, Jamie Raskin should have reported them every year until their liquidation in 2020. The asset only appears on the 2020 report, which he submitted months after his wife cashed out the stock.

Sarah Bloom Raskin did not respond to an email about why her husband didn't disclose her holdings.

Insider's "Conflicted Congress" investigation, published in December, revealed that 54 members of Congress and at least 182 of the highest-paid Capitol Hill staffers, violated the STOCK Act with tardy or incomplete stock trades during 2020 and 2021.

The consequences for doing so are generally minimal, inconsistently applied, and not publicly recorded, Insider found. Since then, lawmakers on the left and right have introduced several bills to ban or otherwise limit their colleagues — and in some cases, spouses — from buying and selling individual stocks.

Relatedly, Jamie Raskin acknowledged that he was roughly seven months late disclosing that his wife sold her 195,936 shares in Reserve Trust for nearly $1.5 million on December 18, 2020. Stock purchases and sales exceeding $1,000 must be reported within 30 to 45 days after the transaction, depending on when a member learned of the transactions, according to the STOCK Act.

Jamie Raskin explained the task had fallen through the cracks because the liquidation happened just before the Raskins son, Thomas, died on December 31, 2020.

"We lost our son during the reporting period, and I filed the report late," Jamie Raskin told Insider.

Raskin has spelled out how she'd avoid conflicts of interest

Sarah Bloom Raskin's work with Reserve Trust is already drawing scrutiny among Republicans.

Sen. Pat Toomey of Pennsylvania, the top Republican on the Banking Committee where she's set to take questions about her nomination, tweeted about it Tuesday.

He also slammed the nominee for being part of Washington's "revolving door," a term used to describe the common practice in which high-level executives move in and out of roles in the public sphere and the more lucrative private sector.

It's unclear what role — if any — Sarah Bloom Raskin had in helping to secure the fintech trust's master account given her past work, connections, and knowledge of the Fed. The White House and Reserve Trust did not respond to Insider's questions on the matter.

At Thursday's hearing, Lummis said it was "my understanding" that Sarah Bloom Raskin had called the Kansas City Fed in 2017 shortly after Reserve Trust's initial application for a master account was denied. But Sarah Bloom Raskin didn't acknowledge or deny whether she called the Fed to discuss it.

"If you are suggesting anything improper, I want to make very clear that I have first of all had the honor to serve in various public capacities, and each time I left I have been very mindful of the rules regarding departure," she said at the hearing, referring to ethics rules for ex-public officials.

Reserve Trust has now been acquired by fintech venture capital company QED Fund. When new investors come in, they often buy off stocks from current investors. Reserve Trust obtained the master account in 2018, right in the middle of Sarah Bloom Raskin's work with the company.

"Something doesn't smell right with the way this played out," Lummis said, adding that other fintech companies in Wyoming hadn't been able to get a master account. She called for the committee to scrutinize the matter more.

Tom Jones, founder of the conservative research group American Accountability Forum, said Biden should withdraw Sarah Bloom Raskin's nomination over the omission and accused the Raskins of hiding the financial arrangement from the public.

"Sarah Bloom Raskin's behavior here is the worst type of revolving door crony capitalism," he said. "She took her connections and influence at the Federal Reserve and parlayed it into a $1.5 million payout. Adding insult to injury, she and her husband hid the deal from the public in violation of congressional ethics disclosure rules."

Biden on January 14 nominated Sarah Bloom Raskin to the vice chairwoman role, which was first created after the 2008 financial crisis. Raskin is currently a law professor at Duke University and is on the board of the Vanguard Group, one of the largest investment management companies in the world.

Filling out open roles at the Fed is crucial for the Biden administration as it gears up to get a handle on inflation, which has reached a 40-year high and has become a hot-button issue ahead of the 2022 midterm elections.

Sarah Bloom Raskin detailed steps she would take to avoid conflicts of interest, real or perceived, in a letter to the Fed's board of governors.

The Biden administration's "Ethics Pledge" requires members of the administration to recuse themselves from matters that would involve any former employers or clients that they worked with over the past two years. Raskin left the Reserve Trust in August 2019 so she wouldn't have to recuse herself from business involving the company, the White House said.

"Ms. Raskin's financial disclosures have been reviewed and certified by career ethics officials the Office of Government Ethics and the Federal Reserve," Chris Meagher, deputy press secretary at the White House, told Insider.

The White House said that she no longer held financial interest in Reserve Trust, "so no further divestiture is required."

Sen. Joe Manchin of West Virginia, the most conservative Democrat in the upper chamber, told Insider Thursday that he had "no thoughts whatsoever" on Sarah Bloom Raskin's nomination and wanted to meet with her before making any decision. Sen. Jon Tester, a Democrat of Montana, said he planned to support her.

Though Tester is on the Banking Committee, he said he'd been in another hearing during the Lummis exchange but that his staff filled him in about the Reserve Trust questioning.

"They said the connection wasn't that clear," he said.

This story has been updated to include developments during the Banking Committee hearing and interviews with senators.