Addressed To:
The Office of Congressional Ethics
The House Committee on Ethics
The Securities and Exchange Commission (SEC)
The Department of Justice (DOJ)
The Office of the Inspector General (OIG)
The Financial Industry Regulatory Authority (FINRA)
The Government Accountability Office (GAO)
The Federal Bureau of Investigation (FBI)
The President of the United States
The Speaker of the House of Representatives
The Minority Leader of the House of Representatives
State Attorneys General
Citizens for Responsibility and Ethics in Washington (CREW)
Common Cause
Public Citizen
The U.S. Attorney for the District of Columbia

Introduction

We, the undersigned, petition for an immediate and thorough investigation into Congressman Michael McCaul’s financial transactions related to investments in Meta Platforms, Inc. (META) following his authorship and advancement of legislation seeking to ban TikTok, a direct competitor to META. This petition highlights a potential violation of the Stop Trading on Congressional Knowledge (STOCK) Act of 2012, federal securities laws, and congressional ethics standards.

Through this petition, we aim to defend the integrity of our legislative processes and the principle of accountability in governance, supported by case law and precedents that have held public officials to the highest ethical and legal standards.

Allegations Against Congressman Michael McCaul

Congressman McCaul introduced legislation on March 3, 2023, targeting TikTok, a competitor of META, and subsequently made financial investments totaling $1.15 million in META over the following weeks. These investments include: $150,000 on March 22, 2023,
Two additional $150,000 investments on March 26 and March 28, and
$350,000 investments on April 1 and April 5, respectively.

These transactions align suspiciously with legislative activity that stands to benefit META financially, indicating a possible abuse of legislative privilege and access to non-public information for personal financial gain. This conduct, if substantiated, is a clear violation of federal law and ethical norms governing members of Congress.

Legal Framework and Supporting Case Law

The STOCK Act of 2012

The STOCK Act prohibits members of Congress from using non-public information derived from their legislative duties for personal financial benefit. In United States v. Newman, 773 F.3d 438 (2d Cir. 2014), the court held that trading on material, non-public information obtained through a fiduciary duty is illegal under the Securities Exchange Act of 1934. Although Newman involved corporate insiders, the STOCK Act extends similar prohibitions to members of Congress, recognizing their duty to the public as fiduciary in nature.

United States v. O’Hagan, 521 U.S. 642 (1997)
The U.S. Supreme Court upheld in O’Hagan that trading on material, non-public information breaches the fiduciary duty owed to the source of the information. This principle underscores that public officials who exploit their position to gain financially undermine the integrity of both public trust and the market.

United States v. Blaszczak, 947 F.3d 19 (2d Cir. 2019)
In Blaszczak, the court ruled that even non-public government information used for trading can lead to convictions under securities fraud statutes, reinforcing the principle that access to sensitive information from a public office cannot be used for private enrichment.
Precedents in Congressional Accountability
Members of Congress, including Representative Chris Collins, have been prosecuted and convicted for insider trading violations.

In United States v. Collins, No. 18-CR-567 (S.D.N.Y. 2019), Representative Collins was sentenced to federal prison after tipping non-public corporate information to his son for stock trading. His conduct was deemed a breach of trust and public service ethics, resulting in significant legal consequences.

Congressman McCaul’s financial transactions mirror similar violations. His legislative role gave him knowledge of the economic impact the TikTok ban would have on META’s stock, which he appears to have exploited for personal financial gain.

The Harm of Insider Trading in Public Office

Insider trading by public officials undermines the core tenets of democracy and market fairness. As held in Dirks v. SEC, 463 U.S. 646 (1983), the Supreme Court recognized that insider trading erodes investor confidence and fairness in the securities market. When those in public office engage in such conduct, the damage extends beyond the financial markets to the public trust in democratic governance.

Prayer for Relief

We respectfully call upon the relevant authorities to take the following actions:

Comprehensive Investigation
The Office of Congressional Ethics, the Securities and Exchange Commission, and the Department of Justice must immediately launch an investigation into Congressman McCaul’s financial transactions and determine whether they constitute violations of the STOCK Act, federal securities laws, and congressional ethics standards.

Transparency in Financial Disclosures
Congressman McCaul must publicly disclose all financial records, communications, and relevant documentation regarding his META investments and legislative activities concerning TikTok.

Enforcement of Accountability
If evidence of wrongdoing is established, we demand enforcement of the law, including:

Criminal prosecution under insider trading statutes;
Referral for disciplinary measures, including censure or expulsion from Congress; and
Repayment of any profits derived from these transactions to prevent unjust enrichment.

Conclusion

The U.S. Supreme Court, in Caperton v. A.T. Massey Coal Co., 556 U.S. 868 (2009), reaffirmed that even the appearance of impropriety can undermine public confidence in the impartiality of public institutions. Congressman McCaul’s actions present not just the appearance but also the strong likelihood of impropriety. Failing to address this conduct would signal that members of Congress are above the law, further eroding public trust in our government.

We urge you to act decisively to preserve the rule of law and reaffirm that no one, including elected officials, is above the ethical and legal standards that govern our society.

Respectfully submitted,
Brandon J. Krenzler - A concerned citizen of the United States of America