Assemblymember Gail Pellerin, (D-28th District) and three other legislators led all of their colleagues in reporting at least $1 million invested in the stock market in 2023, according to an analysis by CalMatters.
Pellerin is the former Santa Cruz County Clerk as well as its top elections official. She is seeking re-election to a second term representing a district that includes portions of Santa Cruz and Santa Clara counties, opposed by Republican Liz Lawler.
The other three 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, and Republican Assemblymember Joe Patterson from Rocklin, who ran a small consulting business – but California’s limited disclosure laws don’t provide a complete picture of each lawmaker’s wealth.
It also is 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. Legislators 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.
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.
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.
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 using Digital Democracy including by Niello on Assembly Bill 473, a law that might impact franchise car dealers, and by Patterson on AB 1659, a bill that would require small electronic devices sold in the state to be compatible with USB-C charging.
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.”
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.
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.
Jeremia Kimelman is a reporter with CalMatters.
