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U.S. Office of Ethics May Force Trump's Hand, Compel Him to Sell Company

By Dustin Rowles | Politics | December 16, 2016 |

By Dustin Rowles | Politics | December 16, 2016 |

We still do not know what today’s Obama press conference is about, but one possibility is that the President will raise the issue of Donald Trump’s business conflicts, and alert his transition team to the STOCK Act, a law passed in 2012 to criminalize insider trading among members of Congress. In a letter released yesterday, the United States Office of Ethics clarified that the Republican-backed STOCK Act also applies to both the Vice President and the President. In fact, Republicans were insistent that it apply to the President when it was passed, because they wanted to ensure that Obama didn’t benefit from any insider trading. (The irony is rich.)

Basically, the law prohibits the President from profiting from anything he learns as the President, and it appears to apply to any gains Trump may make in his real estate business using information learned as President. Passing control of his company to his sons would actually put him in more danger of breaking the law, because his real estate holdings — operating by another party — would more likely be classified as a security for the purposes of the law.

From HuffPo’s Paul Blumenthal:

This law could cause significant problems for Trump, who appears ready to continue to hold a stake in his multibillion-dollar business enterprise. He has hinted that he will hand off control of the company to his two oldest sons, Donald Jr. and Eric Trump. If at any time he gives them profitable information that he has learned through his presidential duties and that has not been disclosed to the public, he would be committing a felony.

In earlier guidance on the STOCK Act, OGE gave examples of what violating the prohibition would look like. The most relevant example for Trump involved an Army Corps of Engineers employee who also belonged to an environmental organization. This person would be banned from giving nonpublic information about the construction of a dam to a member of the environmental organization or to a reporter.

It is possible, of course, that the Republican-controlled Congress would repeal the law after Trump is inaugurated, but that would be the height of hypocrisy. Not only was the law Republican-backed, it passed in both houses by a combined vote of 530-5.

It’s not clear how Donald Trump will handle this situation, because he has not yet provided a plan to avoid business conflicts, having postponed a press conference (originally scheduled for yesterday) to announce his plan. He’s punted that question into January. It is clear, however, that having his sons sit in on transition meetings, as he did earlier this week, definitely puts Trump at risk of breaking the law.

Under the law, Donald Trump will be forced to file financial disclosure reports, which means we’ll at least find out if he’s telling the truth when he said he sold all of his stocks last June.

Indeed, it is now clear that if he maintains an ownership in his company — regardless of who is running it — he could easily run afoul of the Stock Act. Penalties for violations include a fine or imprisonment of up to 15 years, or both, as well as possible disqualification from holding federal office. The most logical recourse for Trump would be to completely divest from his business or resign.

In a related move, Elizabeth Warren announced yesterday that she would push to block Trump’s conflicts of interests by invoking the Emoluments Clause of Constitution, requiring that Trump completely divest.

Today’s header image comes from TBS’s Search Party, which I am really digging right now.

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Dustin is the founder and co-owner of Pajiba. You may email him here, follow him on Twitter, or listen to his weekly TV podcast, Podjiba.