Four legislators reported at least $1 million invested in the stock market in 2023, but California’s limited disclosure laws don’t provide a complete picture of each lawmaker’s wealth.

Jeremia Kimelman

CalMatters

The four legislators are Sen. Roger Niello, a Republican from Roseville and a prominent car dealer in the Sacramento area; Sen. Bill Dodd, a Democrat from Napa and former water company executive; Democratic Assemblymember Gail Pellerin, a former county elections administrator in Santa Cruz; and Republican Assemblymember Joe Patterson from Rocklin, who ran a small consulting business.

It’s likely there are legislators with as much or more wealth, but California disclosure laws only require them to reveal ownership of individual stocks, business holdings and income property. They are not required to report savings accounts, mutual fund investments or other financial instruments.

Even the stock disclosures are blurry since investments are reported in four huge value ranges: between $2,000 and $10,000, up to $100,000, less than $1 million and more than $1 million. Investments worth less than $2,000 don’t have to be reported.

Related Story: Californians Will Decide — in 2024 — Whether to Ban Slavery. What Will the ...

The Intention Behind Limited Wealth Disclosure

The limited disclosure about wealth was an intentional part of Proposition 9 in 1974, which created the state’s Fair Political Practices Commission and set rules about financial reporting requirements. Bob Stern, a co-author of the proposition, said the disclosure rule was meant to identify possible conflicts where a legislator might benefit financially from a policy decision, not to detail a member’s overall wealth.

“The idea was that public officials, including the legislators, should be disclosing assets that can possibly be affected by their decisions,” said Stern.

Carmen Balber, executive director of Consumer Watchdog, put it slightly differently: “We do not want lawmakers voting with their pocketbooks.”

Political reform groups are divided about the adequacy of California’s disclosure laws, but Stern said he now believes it would be better for the public to understand a legislator’s overall wealth even without additional details about specific investments or assets.

“If I were doing it again today, I think I’d be a little bit more cognizant of wealth, and maybe change that to some degree to indicate maybe a bit more specificity. But we didn’t want it,” said Stern.

What changed his mind? The amount of money people have.

“If you have somebody who’s worth a billion dollars, versus somebody who’s worth $100 million, that probably is important for the public to know,” he said.

In total, the stock brokerage accounts of current legislators were worth between nearly $16 million and $112 million last year. Among the legislators who reported stock holdings, the median portfolio was valued between $81,005 and $660,000, though nearly 70% of California’s 120 lawmakers reported no investments.

Related Story: Doxxing Victims in California May Gain Right to Sue to ‘Bring Some Power ...

The Most Common Stocks Among Legislators

The most common stocks reported by legislators are some of the most valuable and recognizable brands in the world. Three of the four most prevalent stocks were from California companies.

“We do not want lawmakers voting with their pocketbooks.”
CARMEN BALBER, EXECUTIVE DIRECTOR, CONSUMER WATCHDOG

Investments with a total value between $524,016 and $5.2 million in Apple were reported by 18 lawmakers, the most common stock across the Legislature.

The next three most popular investments were Disney, Alphabet (the parent company of Google), and Bank of America.

Stock ownership in Disney was reported by 17 legislators and valued between $564,010 and $5.5 million. Investments by 15 legislators in Alphabet were valued between $182,008 and $1.7 million and the same number of legislators made investments in Bank of America, worth between $110,010 and $1 million.

Nearly 550 stocks were reported by 44 current legislators, which means that 76 sitting legislators reported no stock ownership last year.

According to Stern, that’s the law working as intended. “That’s good!” he said.

CalMatters compared the voting records of the four legislators who reported at least $1 million in stocks with the positions that those companies took on legislation this session and did not find a conflict of interest.

If there is a conflict of interest, state officials said it is the duty of the legislator to recuse themselves from the matter and leave the room while it is being discussed. There is no official record of whether a legislator has recused themselves from a vote due to a financial conflict of interest, though CalMatters found at least two instances of recusal due to potential financial conflicts of interest.

Jay Wierenga, spokesperson for the Fair Political Practices Commission, said the guidance for a conflict is in Government Code Section 87100: “A public official at any level of state or local government shall not make, participate in making, or in any way attempt to use the public official’s official position to influence a governmental decision in which the official knows or has reason to know the official has a financial interest.”

Related Story: Law Limiting New Oil Wells in California Set to Take Effect After Industry ...

The stock disclosures for 2023 also reveal that some legislators reported a less valuable portfolio compared to the year before. Assembly members Marc Berman and Jacqui Irwin both reported at least $1 million in stock investments during 2022, but not last year.

Berman, a Democrat from Palo Alto, reported selling between $54,005 and $520,000 worth of stock owned by his spouse in August and December. Irwin, a Thousand Oaks Democrat and former tech engineer, sold Amazon stock worth somewhere between $300,003 and $3 million between May and July last year. Her husband is the former chief operating officer at Ring, which is owned by Amazon.

Comparing California’s Disclosure Requirements with Other States

California’s disclosure requirements are less exacting than Congress, where elected officials have to report stock transactions within 45 days, but still more stringent than a lot of other places, according to Sean McMorris, ethics program manager at California Common Cause.

“I think California has one of the better systems,” he said. “The Political Reform Act is constantly getting amended every year to account for loopholes or new situations, or technology, you know, and how people send in and get money.”

According to an analysis of data from the National Conference of State Legislatures, roughly half of the states do not require any sort of stock disclosure. The California law can be changed with a two-thirds vote of the Legislature.

About the Author

Jeremia is a data journalist who uses code and data to make policy and politicians easier to understand. He was previously a graphics editor at the COVID Tracking Project and a data journalist at NBC News covering elections and national politics. He grew up in California and is excited to be back home after an extended time as a New Yorker. When he isn’t on the computer you can find him out in the garden or on a bicycle.

About CalMatters

CalMatters is a nonprofit, nonpartisan newsroom committed to explaining California policy and politics.