Politics

China critic Sen. Tommy Tuberville of Alabama violated stock disclosure law, sold Alibaba option

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Key Points
  • Sen. Tommy Tuberville of Alabama, a leading critic of China, broke a federal financial transparency law by failing to disclose stock trades within a 45-day window.
  • The trading in Tuberville's account included the sale of stock options of the leading Chinese e-commerce company, Alibaba.
  • A spokeswoman for the Republican said he had been unaware of the trades and that they were conducted by financial advisors.
  • Tuberville praised President Joe Biden for an executive order targeting U.S. investments in Chinese companies.
Senator-elect Tommy Tuberville, a Republican from Alabama, stands for a photo at the U.S. Capitol in Washington, D.C., November 9, 2020.
Stefani Reynolds | Pool | Reuters

Sen. Tommy Tuberville ran for office while arguing for the "rule of law" and criticizing China — but in less than eight months on the job, the Alabama Republican has broken a federal financial transparency law, while also selling stock options of China's leading e-commerce company.

Tuberville, a newly disclosed financial disclosure report reveals, failed as required by the STOCK Act to file disclosures of about 130 stock and stock options trades executed from January through May within a maximum 45-day window mandated by that law, which applies to members of Congress.

The trades ranged in total value from $894,000 to more than $3.5 million, according to the report filed Friday. The report lists values in ranges, not in absolute terms.

Those trades included a Jan. 25 sale of stock put options for Alibaba Group Holding Limited, the giant Chinese e-commerce company.

The sale of the put options — which would give their holders the right to sell Alibaba at a share price of $230 by Sept. 19 — was valued at $15,001 to $50,000.

The sale came after Tuberville, a former college football coach and Donald Trump ally who has blasted China's government, divested an investment in Alibaba in mid-2020, months before winning election to the Senate.

The trades and Tuberville's failure to report them by the STOCK Act deadline were revealed by Business Insider.

Business Insider noted that Tuberville also had bought and sold stocks and stock options in companies "in a variety of companies particularly sensitive to the" Covid pandemic, including Regeneron Pharmaceuticals, Johnson & Johnson and 3M, even as he sat on the Senate Committee on Health, Education, Labor and Pensions.

The late filing by Tuberville is just the latest in a series of controversies involving individual stock trades by members of Congress, who are allowed to buy and sell shares in individual companies, many of which are affected by federal legislation.

Last year, federal prosecutors investigated stock sales, in advance of a coronavirus-fueled stock share price plunge, by and related to Sen. Richard Burr, R-N.C. Sen. Jim Inhofe of R-Okla., then-Sen Kelly Loeffler, R-Ga., and Sen. Dianne Feinstein, D-Calif.

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Those probes ended without charges being filed — but the investigations and details about the controversial trades were widely publicized at the time Tuberville was running for office.

A Tuberville spokeswoman told CNBC that the former Auburn University coach had not even known about the individual stock and stock option trades detailed by Business Insider and that as a result also had not known they needed to be disclosed by the STOCK Act's deadline.

She said Tuberville has financial advisors who handle his stock trading — but she would not identify those managers when CNBC asked who they were.

The spokeswoman said in an email, "Senator Tuberville has long had financial advisors who actively manage his portfolio without his day-to-day involvement."

"Senator Tuberville was unaware that the specific transactions reported in this particular periodic transaction report occurred," she said.

"Upon becoming aware of the transactions, the Senator expeditiously prepared and submitted this report to the Senate Ethics Committee," she said.

"The Senator has put processes in place for timely reporting moving forward," the spokeswoman added.

A number of senators eyed by federal investigators last year likewise had said they did not personally conduct trades for their stock portfolios.

CNBC asked whether anyone from Tuberville's office would be disciplined for its failure to comply with the STOCK Act deadline, and whether Tuberville would get rid of his portfolio management team.

The spokeswoman did not answer either question.

When asked about Alibaba, the spokeswoman noted that she had told reporters earlier this year that Tuberville's investment in Alibaba shares had been less than $5,000, and that once he became aware that he owned the stock in early 2020 "he instructed his advisors to divest in the stock."

That divestment occurred in almost the middle of 2020, on June 1 of that year, she said.

Asked whether Tuberville has paid a $200 fine for missing the STOCK Act disclosure filing deadline, the spokeswoman said, "Our office is working with the Committee to ensure full compliance with their rules."

CNBC has reached out to the Senate Select Committee on Ethics for comment.

On June 4, Tuberville praised President Joe Biden for issuing an executive order that would allow the United States to prohibit U.S. investments in Chinese companies that the White House said would undermine the security or democratic values of the United States and our allies."

"This Executive Order is a step in the right direction, and I'm glad President Biden is building on the foundation President Trump laid for ending American investment in Chinese companies," Tuberville said last month.

"Chinese companies routinely violate U.S. sanction laws and actively enable the Chinese Communist Party's military expansion and persecution of religious minorities."

Tuberville also noted that in May he had introduced the Prohibiting TSP Investment in China Act, which would permanently ban federal Thrift Savings Plans for retirement from being invested in Chinese company.

Reuters reported in 2019 that a Chinese Communist Party government propaganda app that had become hugely popular in China was developed by Alibaba.

In May, while promoting his bill that would ban TSP funds from being invested in Chinese companies, Tuberville fumed, "We've seen it time and again — Chinese companies don't play by the rules, committing intellectual property theft and disregarding basic regulatory standards at the expense of investors."

"Not a single taxpayer dollar should be invested with these entities that have a clear history of corruption," the senator said.

In June 2020, when he was running for the Senate, Tuberville blasted the U.S. Supreme Court for a ruling that blocked the Trump administration from ending the DACA program, which allows undocumented people who were brought to the United States at a young age to remain in the country.

"The Supreme Court put swampy political correctness ahead of the rule of law and the everyday, hardworking Americans who have joined President Trump in making our country great again," Tuberville said.