Another member of Congress is under scrutiny for a fortunately timed trade made prior to a surge in the company's stock price, adding yet another episode to conversations on Capitol Hill around banning members of Congress from trading stocks, but one expert told Newsweek it could be a coincidence.
Tommy Tuberville, an Alabama Republican who serves on both the Senate Armed Services and Health, Education, Labor and Pensions, has been gathering attention from stock trackers in recent days for a trio of trades he made last month with a relatively obscure biotechnology firm that has been lauded for its work treating soldiers and civilians wounded during the ongoing war in Ukraine.
On July 25, according to disclosure reports filed earlier this week, Senator Tommy Tuberville made three separate purchases of stock in Humacyte —a relatively obscure biotech company—in an amount between $3,000 and $45,000.
There was no clear motivation why. Of the purchases Tuberville made during July, Humacyte was arguably the most obscure, with the trades listed alongside investments in firms like Pfizer, Proctor & Gamble, and Under Armor. The stock was also performing relatively poorly, approaching a near-all-time low at the time of his purchase.
However, smart investors buy low. And as things turned out, Tuberville bought Humacyte stock at exactly the right time.
On an earnings call with investors several weeks later on August 14, Humacyte leadership discussed the successful use of its replacement blood vessel technology in treating a litany of Ukrainian soldiers' traumatic wounds, ranging from gunshots to blast injuries. Among the 19 patients treated, they said, clinicians reported high rates of success among those treated, including 30-day limb salvage rates of 100 percent and 30-day survival rates of 100 percent.
"Ukrainian clinicians concluded that the HAV has the potential to offer combat surgical teams an off-the-shelf and universally implantable therapy that is resistant to infection, potentially offering durable performance to military personnel and helping with limb salvage," Humacyte leadership wrote in a summary brief to investors.
If investors loved it, the market loved it more, with Humacyte receiving a roughly 35 percent bump in stock price between August 14 and August 16. It was also a potentially large payoff for Tuberville as well; On July 25, when he purchased the stock, the price per share was $2.87. On August 15, the price had reached $4.48—its highest price since May.
Notably, this week's price was nowhere near the peak price for Humacyte stock. It was running at $14.30 in September 2021 (shortly after the company's initial public offering) and has stayed low ever since. The recent gains also appear to match normal ebbs and flows in share price the company had seen over the last year.
But Humacyte is a small company. And Tuberville happens to sit on a pair of committees dealing directly with the unique overlap in Humacyte's recent area of practice—a coincidence that quickly raised the hackles of various financial watchdogs after the trades were reported.
"I rarely see politicians trading stock in companies as small as Humacyte, and it's VERY strange that the trades were so well-timed especially given Tuberville's committee assignments," Quiver Quantitative, a firm that monitors Congressional stock trades, wrote on social media shortly after the trades were made public.
Newsweek has reached out to Humacyte via email for comment. In a statement to Newsweek, a spokesperson for Tuberville's office downplayed the connection, saying that the senator has no personal knowledge of the stocks in his portfolio.
"Senator Tuberville has long had financial advisors who actively manage his portfolio without his day-to-day involvement," a Tuberville spokesperson told Newsweek.
There's little to suggest a direct relationship between Humacyte and Tuberville. Neither the company nor any of its employees have donated to his campaign or a political action committee affiliated with his campaign. And while the company currently has lobbyists on Capitol Hill, the most recent relevant work they performed involved advocating policies for access and reimbursement for "Regenerative Medicine therapy." Neither of Tuberville's committees has recently dealt with legislation that could directly or indirectly benefit the company's work.
But given recent headlines the Senator was late in disclosing nearly 130 separate stock trades from last January to May—not to mention scrutiny on the trading activity of a bipartisan group of lawmakers from Democrats Nancy Pelosi and Diane Feinstein to Florida Republican Rick Scott—the timing of the trades could be worth further scrutiny. Other disclosures also show Tuberville has also had stock in the company since March 2022, shortly after the war in Ukraine first broke out.
But at this point, there's little to suggest any explicit wrongdoing.
"We always are looking for two things—people who violate their duty to report on time and those that appear to be in conflict," Kedric Payne, Vice President, General Counsel and Senior Director for Ethics at Washington, D.C., watchdog group the Campaign Legal Center told Newsweek.
"I think there needs to be more to show the appearance of the conflict [in this case]," he added. "I see the point about it being an obscure biotech company, so it does raise a question 'Well, how did you pick that one?' But what's missing is to show that the committee or something else he was doing any type of other activity Congress was directly related to Humacyte. Not just about the war in Ukraine, but truly about the firm or the services they provide."
Others agreed.
"Without more information, it's hard to know whether anything problematic is occurring here, but these are the kinds of legitimate questions that arise because Senators and Members of Congress refuse to ban the ownership and trading of individual stocks," Donald Sherman, a senior vice president for Citizens for a Responsible and Ethical Washington told Newsweek in a statement. "The public should not have to wonder if their elected representatives are working for them or instead influenced by their personal financial portfolios in their public jobs."
Tuberville—one of the roughly one-fifth of Congress that owns stock—has also been a vocal opponent of efforts to ban members of Congress from owning stock, describing such a prohibition in a February interview with The Independent as "ridiculous," and potentially, discourage some from wanting to serve in Congress.
"I think it would really cut back on the amount of people that would want to come up here and serve, I really do," he said at the time. "We don't need that."
Update 08/17/23 5:15 p.m. ET: This article was updated with more information and a quote from Donald Sherman.
Uncommon Knowledge
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Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
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