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Capito camp, Swint debate stock trade

CHARLESTON, W.Va. -- Howard Swint, the Democratic challenger in the U.S. House race against Shelley Moore Capito, R-W.Va., is alleging that Capito and her husband Charles benefited from insider information when they traded Citigroup stocks in 2008.

Capito is a member of the House Financial Services Committee. Her husband is a Citigroup Global Markets executive.

Even though Citigroup stock dropped 76 percent at one point in 2008, the Capitos made $50,000 from trading Citigroup stocks that year.

Kent Gates, who is managing Capito's campaign, said these and other charges about using insider information for insider trading are simply false.

In her "Calendar Year 2008 Financial Disclosure Statement" filed with the House of Representatives, Capito reported making three sales of Citigroup stock -- on July 18, Sept. 17 and Nov. 18. The three transactions totaled between $100,001 and $250,000, according to the statement.

'Capito files everything'

Capito's four most recent financial disclosure statements reported her husband received salaries from working for Citigroup Global Markets in 2008, 2009 and 2011.

He also reported "earned income" from: United Bank in 2009, 2010 and 2011; Morgan Stanley in 2009; and Wells Fargo Advisors in 2011.

None of her financial disclosure reports, however, reveal the salaries these banking institutions paid Charles Capito.

Swint is asking that those figures be released.

Gates said Capito "has filed all required disclosure documents as a candidate and House member. Howard Swint's desperate calls for additional information, not legally required, ring hollow -- especially since he has failed transparency by refusing to file personal and campaign financial information."

A search of Federal Elections Commission records did not reveal any filings by Swint.

Once candidates spend more than $5,000 on their Congressional campaigns, the FEC requires them to file financial reports.

Gates said Swint is likely to have already spent more than $5,000, including money to pay the $1,700 filing fee, as well as expenses for his campaign website, yard signs, brochures, opposition research and campaign trips -- including at least three visits to the Eastern Panhandle.

"Capito files everything," Gates said. "He [Swint] is hiding everything from public transparency.

On Tuesday, Swint said, "I have not reached the threshold of $5,000 in expenditures or in campaign contributions. I am making this campaign a hallmark for campaign finance and lobbying reform."

According to her latest FEC report, covering the period through June 30, Capito reported raising $1.59 million and spending $746,692. Her campaign had $1.4 million in "cash on hand."

Citigroup stock lost 23 percent of value

On Oct. 28, 2008, Citigroup and eight other banks and financial institutions became the first companies to receive TARP [Troubled Asset Relief Program] funds. Citigroup received $25 billion.

A Special Inspector General's report released on Jan. 13, 2011 -- titled "Extraordinary Financial Assistance provided to Citigroup Inc." -- reported Citigroup continued to suffer "significant instability after receiving its initial $25 billion TARP investment.

"Citigroup would lose $27.68 billion in 2008, and by November 19, 2008, its stock price had dropped precipitously," the report stated. Then Treasury Secretary Henry Paulson believed "the company was teetering on the edge of failure."

The Capitos made one Citigroup trade in November.

In her "Disclosure Statement to the House for 2008," Capito reported selling shares of Citigroup stock worth between $100,000 and $250,000 on Nov. 18, 2008. The next day, Citigroup stock lost 23 percent of its value.

Swint alleges: "They had nonpublic information, then acted on it. They dumped stock to avoid the crash the next day.

"Citigroup lost 76 percent that year. But the Capitos had a $50,000 gain in their transactions that year."

Gates said Swint's charge about using "nonpublic information" to sell and trade Citigroup stock "is absolutely false and without evidence.

"Swint's entire campaign had been waged on personal, false attacks and now intentional lies like this offered to justify his calls for more disclosure by others, while he fails to disclose any information about him or offer any solutions to real challenges we face," Gates said.

'Very disconcerting, very troubling'

Author Peter Schweizer, a fellow at Stanford University's Hoover Institution -- a conservative-leaning think tank -- mentions Capito in his book published last November.

The book -- "Throw Them All Out: How Politicians and their Friends Get Rich Off Insider Stock Tips, Land Deals and Cronyism That Would Send the Rest of Us to Prison" -- criticizes politicians of all political views.

Shortly after the book was published, Capito said it contained "seriously misleading statements that were made recklessly."

Schweizer's book mentioned her just once, stating, "Capito and her husband dumped between $100,000 and $250,000 in Citigroup stock the day after the briefing."

Schweizer was referring to a Sept. 16, 2008, closed-door meeting Congressional leaders had with Treasury Secretary Henry Paulson and Federal Reserve Bank Chairman Ben Bernanke.

Schweizer previously told the Gazette that he did not make any factual errors in his book.

"I simply noted that as a member of the House Financial Services Committee, she sold a large quantity of stock in Citigroup.

"I did not say that she attended the [private Sept. 16] meeting, nor did I ever specifically say that she used insider information," Schweizer wrote in a December e-mail.

"My point is that a large number of committee members were actively trading stocks during the financial crisis and the subsequent debate over TARP, the financial bailout. Most Americans think this is outrageous and presents a clear conflict of interest."

Gates said Schweizer later backed off.

"Capito did not attend said meeting," Gates stated. "Stock attained as part of spouse employment compensation ... was sold because [of an] expiring call option, leading the author backtracking in two interviews."

Gates cited a November 2011 interview with WCHS-TV when he said "that he never claimed the transaction was done off  'insider information.'"

Gates said Schweizer backtracked "further" when the Sunday Gazette-Mail quoted him as stating, "I did not say Capito was at the meeting" and "never specifically used inside information."

In a Sept. 26 filmed interview with MorganCountyUSA, Schweizer said, "There were a series of transactions related to financial stock that took place in 2008 during the financial crisis. And as I demonstrated in other instances, this is very disconcerting because it indicates the possibility that these transactions were done based on inside information."

Asked recently if he backed off from statements about Capito in his book, Schweizer said, "No, not at all. ...  I don't exactly know what a person was thinking when they made these trades.

"But the timing is very disconcerting and very troubling. And the timing is the timing. That's not something that I made up. That's based on the facts and the information. So no, I have not backed off at all on what I said in the book."

Reach Paul J. Nyden at pjnyden@wvgazette.com or 304-348-5164.


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