Environmentalists with stock in oil companies. A vocal social media critic with hundreds of thousands of dollars invested in the owners of Facebook and YouTube. Union-backed Democrats making money off the very companies whose worker policies they’ve criticized.
A third of the members in the California Legislature collectively reported at least $14 million worth of investments on their most recent financial disclosures — but their stocks don’t always align with their political values, a Times analysis found.
Their collective holdings could total tens of millions of dollars more, but exact amounts are unclear because financial disclosure forms required by the state allow politicians to report a wide range of minimum and maximum fair market values.
Elected officials and other public employees who influence government decisions are required to report investments including stocks, bonds and business partnerships, along with income, properties and gifts they’ve accepted on annual statements of economic interests. Diversified investments, such as certain retirement accounts and mutual funds, are not required to be disclosed.
The requirement is meant to hold officials accountable for any potential conflicts of interest and to ensure their decisions are “in the best interest of the public and not enhancing their personal finances,” according to the California Fair Political Practices Commission, the state’s political ethics watchdog.
But it also reveals when officials’ financial investments run counter to their purported political mission or differ from how they represented themselves to voters during their campaigns.
Democratic state Assemblymember Gail Pellerin, for instance, has a record as an environmentalist but owns stock in major oil, chemical and mining companies that have been criticized for their contributions to climate change. Her colleague Assemblymember Josh Lowenthal (D-Long Beach) has publicly criticized social media platforms for being harmful to children, and wrote legislation aimed at addressing their potential mental health risks. Yet he invests in the companies that own Instagram and YouTube.
That’s not illegal, but it raises questions about why some officials manage their personal finances in ways that clash with their public positions. In these cases, lawmakers are often voting for policies that go against their personal financial interests. While some voters may see them taking a principled stance, others see hypocrisy.
“A lot of these people tell their constituents what they think they want to hear even if they don’t necessarily believe in it or they’re not doing necessarily what’s in the best interest of the public, but themselves,” said Sean McMorris, who focuses on transparency, ethics and accountability at California Common Cause, a government watchdog group.
The Times analysis also found that some legislators are invested in companies that could be affected by the laws they influence and vote on.
According to the most recent financial disclosures, 40 of California’s 120 state lawmakers reported at least $2,000 in investments in 2022 — about 30% of Democrats and about 46% of Republicans. Data on lawmakers’ finances were collected by CalMatters, a nonpartisan nonprofit news outlet, and analyzed by The Times.
All the lawmakers contacted by The Times defended their investments and said they do not weaken their policy stance related to the industries they hold stock in or create conflicts of interest. Many pinned the investments on their spouses.
Federal legislation has been introduced that would ban members of Congress from trading stocks, though no such law has been pitched in California, home to one of the largest economies in the world. In 2020, U.S. representatives who were privy to COVID-19 information ahead of the general public faced backlash for selling stocks just before the virus slammed the economy.
Dozens of lawmakers have come out in support of competing but similar bills that would limit their ability to hold or trade stocks while in office.
Delaney Marsco, senior legal counsel for the Campaign Legal Center, which supports legislation to ban members of Congress from trading stocks, said investments by state lawmakers should be scrutinized too.
“Individual stock holdings can absolutely, regardless of what level of government you’re in, cause those conflicts of interest that raise serious problems with the public’s trust in government,” Marsco said.
Disclosing investments also shows voters if lawmakers are “essentially putting their money where their mouth is,” she said.
Democrats and Big Oil
Assemblymember Pellerin (D-Santa Cruz) was endorsed by environmental organizations such as the Sierra Club when she was elected last year, heralded for her climate policy goals, including a commitment to end the state’s dependence on fossil fuels.
“A vote for Gail Pellerin is a vote for the environment,” Clean Water Action California said in an endorsement in 2022.
But among the roughly $2 million the freshman lawmaker has invested in stocks are holdings in several oil and gas companies, including Exxon Mobil, Chevron and Shell, according to financial disclosure forms.
California filed a lawsuit against those companies this year, alleging that they have led a “campaign of deception” about their role in climate change and the environmental risks of fossil fuels.
According to state disclosure forms, Pellerin also has invested at least $10,000 in Freeport-McMoRan, a metal mining company that was fined millions of dollars by the federal government after an Arizona copper mine allegedly polluted rivers and streams.
Another $10,000 or more is invested in Dow Chemical Co., which manufactured napalm used as a weapon by the U.S. in the Vietnam War and urged the Trump administration to ignore findings that its pesticides are harmful to endangered species.
Pellerin is the only California lawmaker who invests in Philip Morris, the tobacco maker that manufactures Marlboro cigarettes, according to financial disclosure records. Oil and tobacco companies are viewed as so anathema to California Democrats’ agenda that party leaders have in some years prohibited donations from them.
When asked about her stock portfolio, Pellerin said her husband, who died in 2018, was an “avid investor.”
“I vote with only one interest, and that is for what is best for the constituents of the 28th Assembly District,” Pellerin said in a statement, pointing to her support for environmental legislation this year, including a bill that increased penalties against oil and gas companies that violate regulations.
Pellerin pointed out that companies she invests in, including Exxon and Chevron, recently received positive environmental, social and governance scores, an index used by investors to evaluate stocks.
“With my financial advisor, I continue to align these investments with my values,” said Pellerin, who chaired the committee on natural resources and the water, parks and wildlife committee until last month and has written bills that established California Ocean Day and supported environmental restoration projects.
Sen. Richard Roth (D-Riverside) also invests in oil and gas companies. According to his 2022 filings, he has at least $730,000 in investments, including thousands in Chevron and Phillips66, a Texas energy company that paid millions to settle a lawsuit that alleged its gas stations violated California’s anti-pollution laws.
Roth, who declined to comment for this story, also invests tens of thousands more in NuStar, one of the largest petroleum pipeline operators in the nation, and HF Sinclair, which manufactures and sells gasoline and jet fuel.
Roth is a moderate Democrat with a mixed record on environmental legislation. He voted last year to speed up the state’s greenhouse gas reduction goals, which pleased environmentalists, but did not support a bill they championed this year to require corporations to report their climate impacts.
Mike Young, senior director of California Environmental Voters, which endorsed Pellerin last year, called for all lawmakers to divest from oil companies.
The organization supports a bill that aims to prohibit the state’s retirement systems from investing in fossil fuels. The expectation should be the same for elected officials, Young said.
“It certainly is our recommendation that everyone should divest away from fossil fuels however they can,” Young said. “The less hold that oil has, the better.”
Critics of Big Tech
The environment isn’t the only issue in which lawmakers’ investments seem to be at odds with their public-facing politics.
Assemblymember Lowenthal spoke passionately this summer about the harms of social media, telling lobbyists they should be ashamed for opposing legislation he supported to hold tech companies more accountable.
“I’ve seen in my children’s social media the presentation of diet pills, of other things that make them question their own self-worth and their own body image. I’ve seen it firsthand,” Lowenthal said at a hearing this summer. “It is totally and completely inappropriate.”
To opponents of attempts at social media regulation, he said, “Shame on you.”
However, Lowenthal himself has invested at least $100,000 in Meta, which owns Facebook and Instagram, and at least another $100,000 in the company that owns YouTube.
“As a legislator, my job is to protect and improve the quality of life for all Californians. While as a shareholder, I and many other shareholders have exercised our responsibility to be vocal and use our positions to ensure the best product,” Lowenthal said in a statement, adding that he does not trade the stocks that he owns.
In November, California joined dozens of states in a lawsuit against Meta, with Atty. Gen. Rob Bonta alleging the company “designed and deployed harmful features” for youth.
Lowenthal wrote a bill this year that directs a commission to report a statewide strategy that would address the mental health risks of social media. He’s also supported proposals aimed at protecting young people on social media that the companies he’s personally financially invested in opposed.
Lawmakers ditched a bill that would hold social media companies liable for promoting harmful content but advanced another focused more narrowly on child sexual abuse material.
Tech regulation is a perennial issue in the California Capitol, with companies frequently fighting lawmakers’ attempts to govern social media, data privacy and artificial intelligence. Yet Lowenthal is not the only legislator who owns tech stock.
Ten legislators collectively own at least $372,000 in Apple shares; four legislators collectively have invested at least $212,000 in Meta; and six legislators collectively own at least $118,000 in stock in Alphabet, the parent company of Google and YouTube, according to disclosure forms.
Labor-friendly Democrats
Perhaps no issue dominated this year’s legislative session more than worker rights, as strikes took off across many industries during what was coined as a “hot labor summer.”
But even vocal union-supporting Democrats in the state Capitol who were rallying alongside union leaders this year invest in some of the companies they have publicly criticized for their treatment of workers. That includes:
At least $1.2 million in Amazon stock collectively owned by seven lawmakers, including Democrats who voted for a 2021 law backed by unions to crack down on alleged quotas in the e-commerce company’s warehouses amid criticism that workers did not have time to take bathroom breaks.
Assemblymember Jacqui Irwin (D-Thousand Oaks) owns at least $1 million in Amazon stock and voted for that legislation. The lawmaker, who was endorsed by some unions, said the stock was provided to her husband as part of his compensation when his former employer was acquired by Amazon.
“My voting record and my long-standing support for and from unions speaks for itself,” she said in a statement.
- At least $12,000 in McDonald’s stock owned by two Democrats, Roth and Pellerin, who voted for union-backed legislation to raise wages and improve conditions for fast-food workers, which the restaurants fiercely opposed.
At least $100,000 in Disney shares owned by Sen. Anthony Portantino (D-Burbank), who wrote a controversial bill that would have allowed workers on strike to collect unemployment as the company battled with employees over pay and benefits. He marched alongside Hollywood actors and writers as they went on strike against Disney. The California Chamber of Commerce, whose board of directors includes a Disney executive, opposed the bill as a “job killer.”
A spokesperson for Portantino said that the Disney stock was part of his wife’s compensation when she worked for the company years ago, and that the lawmaker “does not engage in the trading of stocks and rigorously follows all ethics and disclosure laws.”
Lawmakers who spoke to The Times for this article said that their investments do not negate their calls for change, and that their holdings do not influence their work in any way.
Instead, it’s their voting records that count, they said, including instances when they have pushed for policies in Sacramento that could be bad for the bottom line of the companies they’re invested in.
Although many lawmakers discounted their investments as their spouses’ and not their own, Ann Ravel, former chair of the California Fair Political Practices Commission, rejected that argument.
California is a “community property” state, which means any income is considered to be owned by both spouses equally.
“They have a self-interest in it,” Ravel said.
When do stocks pose a conflict?
Voters may be unhappy that some politicians hold investments inconsistent with their rhetoric or their party’s values, but it is not a crime.
A potential legal problem occurs, Ravel said, when the companies that lawmakers financially invest in are directly affected by the laws they help craft, and vice versa.
“That’s where the conflicts of interest arise, is when you’re investing in a particular company and then not only are you giving them money for the stock investments but you are also using that company for your own self-interest if you vote in favor of what they do,” Ravel said.
It’s difficult to determine what amounts to an explicit conflict of interest for lawmakers under the ethical guidelines laid out by the Fair Political Practices Commission.
The law defines a conflict of interest as a decision in which the financial impact or effect “is foreseeable” and is “significant enough to be considered material.” That includes when it comes to personal finances, including that of an official’s immediate family.
Some lawmakers own stock in companies that could be affected by legislation they have voted on or oversee committees in charge of decisions regarding those companies, The Times’ analysis found.
Assemblymember Cottie Petrie-Norris (D-Irvine) has invested at least $100,000 in Comcast Corp., her only stock holding, according to disclosure forms. She was recently named the chair of the state Assembly’s Committee on Utilities and Energy, which oversees legislation related to the California Public Utilities Commission, the body in charge of regulating telecommunications companies such as Comcast.
The CPUC has multiple barriers to prevent the public from learning about its handling of deadly disasters and corporate scandals, an investigation found.
In a statement, Petrie-Norris said her committee is unlikely to deal with any issues directly related to Comcast. Her husband works for a company that was acquired by Comcast, she said, “and was given stock as part of that acquisition.”
“I take my obligation as a State Assemblymember very seriously, and I would never allow a family member’s employment to influence my position on legislation,” Petrie-Norris said in a statement. “I will continue to recuse myself from voting on any legislation that specifically relates to Comcast.”
State Sen. Roger W. Niello (R-Fair Oaks) last year reported nearly $3.4 million in investments in dozens of companies in industries that include insurance, technology, banking, real estate and defense contractors.
He has voted against legislation aiming to tighten regulation of oil and gas companies, including attempts to penalize refineries and cap their profits, while investing tens of thousands of dollars in companies including Chevron and ConocoPhillips.
Niello said his holdings do not have any effect on how he votes on bills. His financial disclosure form shows that he sold many of his stocks in individual companies last year. Niello said he shifted most of his investments to professionally managed diverse portfolios, which do not require public disclosure because they are independently managed and do not focus on a specific industry.
“The complete pain in the neck of doing that [financial disclosure] report, the detail, gets to be just oppressive, number one,” Niello said as to why he made the shift. “And number two, to the extent that there’s any appearance of conflict, it helps to minimize that.”
Niello isn’t the first politician to move stock holdings to diversified accounts that don’t require detailed reporting to the public.
Gov. Gavin Newsom, who reported $1.7 million in income on recent tax disclosures, placed his financial investments in a blind trust in 2018, a move sometimes used by public officials to shield them from any violations by limiting their knowledge of their own financial interests.
Concerns over public officials’ stocks have arisen in California before.
In 2001, when the state was hit with widespread power outages amid an electricity shortage, Gov. Gray Davis fired several consultants over conflict-of-interest concerns regarding their stock holdings in power companies.
That year, Steve Maviglio, a Democratic strategist in Sacramento who was serving as Davis’ spokesperson, sold his 300 shares of stock in a California power company over criticism that his ownership constituted a conflict of interest.
For public officials, “ignorance is bliss,” Maviglio said, pointing to mutual funds as a way to avoid conflict. Still, those funds could include investments that concern the public — they’re just not required to be reported in the way that stocks in individual companies are.
All that the public knows is what is reported on financial disclosure forms each year.
“In a perfect world, you’d practice what you preach with your own funds,” Maviglio said.
“But it’s not like they’re trying to hide the ball. They’re ripe for criticism — they know that when they fill out that form.”
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