European Parliament Report Accuses Wilbur Ross of Insider Trading
Source: Mother Jones
Lawmakers have been scrutinizing his 2014 sale of shares in the Bank of Ireland.
HANNAH LEVINTOVADEC. 12, 2017 7:20 AM
Senate Democrats recently called for an investigation into Commerce Secretary Wilbur Ross’ finances, following reports that he vastly overvalued his wealth and failed to disclose his holdings in a Russian shipping company partly owned by Vladimir Putin’s son-in-law. Now the embattled mogul, whose long relationship with Donald Trump has been tested by the disclosures, is facing scrutiny by European lawmakers over allegations that he engaged in insider trading related to his 2014 sale of shares in the Bank of Ireland.
Earlier this year, Luke Ming Flanagan, an Irish politician and member of the European Parliament, the European Union’s governing body, commissioned a report on the 2008 eurozone banking crisis. The final version of this report, written by two Irish financial analysts, was presented in Brussels last week to a group of 52 European Parliament members affiliated with left-leaning parties. And it included a section covering Ross’ investment in the Bank of Ireland, in which he was a major shareholder and a member of the board of directors. The report alleges that when Ross sold off his holdings in the bank for a massive profit in 2014, he possessed inside information that the bank was relying on deceptive accounting practices to mask its losses and embellish its financial position.
Ross’ involvement with the Bank of Ireland began in July 2011, when his hedge fund, WL Ross & Co., joined several institutional investors to purchase a 34.9 percent stake in the struggling financial firm for 1.12 billion euros ($1.6 billion). At the time, the deal “led to much head-scratching,” according to the Irish Examiner. That’s because Ross and the other investors obtained stock in the company at the low price of 10 euro cents a share just months after the bank received a 3.5 billion euro bailout from the Irish Central Bank and a guarantee of up to 10 billion more. (The bank’s shares were trading at about 30 euro cents two months before the sale.) The Irish government’s decision “to sell a large chunk of Bank of Ireland at the bottom of the market” so soon after the government’s cash infusion had stabilized the institution “was on the face of it baffling,” the newspaper reported.
In 2012, Ross joined the bank’s board of directors. Two years later, he began liquidating his stake. In March 2014, he sold a chunk of his holdings at 33 euro cents a share—more than triple what he had paid for the stock. A couple of months later, he sold the remainder of his shares for about 26 euro cents per share. Together, the sales netted him a profit of about 500 million euros ($682 million). The Irish Independent reported at the time that Ross had “pulled off the deal of the century.”
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