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Who is Rick Lazio's broker? If you're day-trading, don't press that execute key until we tell you.
Forget about questions raised by watchdog groups about the propriety of members of congress pinning their financial futures to the stock of companies over which they have authority to make rules and pass laws. Lazio already has been questioned during his race against Hillary Rodham Clinton about his miraculous turnover of stock options during 1997, when he made a quick profit off Quick & Reilly, a discount brokerage run by people who ardently support his campaigns for office. Lazio made his brilliant maneuvers while Quick & Reilly officials were in supposedly secret negotiations to have their huge company purchased by the Boston-area banking giant Fleet.
In 1997, Lazio made 12 acquisitions and sales of usually risky stock option calls in eight different companies and made a profit in every deal.
Two weeks ago, the Securities and Exchange Commission ended its inquiry into Lazio's 1997 Quick & Reilly stock deals with no recommendation for action. But the identity of his broker has never made it into print.
Just after the SEC dropped its probe of Lazio, his campaign staff finally released the candidate's federal and state tax returns for the past 10 years. Reporters weren't allowed to make copies. Instead, they were herded into a room, supplied with doughnuts, and allowed to take notes on copies of the returns.
Campaign officials sat in another room, behind a closed door, summoned by staff to answer the befuddled reporters' queries. Circulating to fend off questions was campaign spokesman Dan McLagan. But McLagan didn't even start working for Lazio until a couple of months ago. What could he know about the congressman's tax history of the past 10 years? Who would believe McLagan anyway? Back in '94, when he was Ollie North's spokesman during the press-hating ex-marine's unsuccessful Senate campaign in Virginia, McLagan told the Los Angeles Times that North was the "most honest, believable, trustworthy candidate I've ever seen."
So the returns had to speak for themselves. The subsequent stories about last week's release of the records were ho-hum, but the returns raise more questions than they answer. They show that Lazio, who certainly wasn't born with a silver foot in his mouth and didn't marry into money, owns little property and started with a minuscule stock portfolio. Maybe his luck changed along with everyone else's when the market soared. But much of his profit during 1997 was due to his or somebody's skill at manipulating stock options. The tax returns show that he wasn't particularly skilled at those maneuvers until his golden year of '97.
The analysis of Lazio's performance is based on his tax returns' reports of capital gains and losses. Losses can come in handy on tax returns, but as a gauge of his market acumen, the returns don't reveal the congressman to have been very clever either in the short term or long term.
1987-1990 He was prescient about technology stocks, it seems, but he still took a bath. In August 1987, according to the records, Lazio (at the time a Suffolk County assistant district attorney) bought an undisclosed number of shares in Miniscribe Corp., then a hot Colorado company that manufactured disk drives. The stock cost him $2418. But Miniscribe wasn't one of the survivors. Lazio wound up selling his shares on October 3, 1990, for $2. He also took losses of $126, $704, and $296 in three other stock sales that year. His long-term capital losses in 1990 totaled $3908.
1991 Lazio stayed out of short-term transactions. But the toxic-waste removal company Texcel International, based on Long Island, proved toxic to Lazio. He had bought 400 shares of the company in August 1989, but they had cost him only $945. A good thing, because he sold them for zero on December 31, 1991. Two other stock transactions in December 1991the sales of McDonald's and Sterling Software stock that he had purchased in the 1980sbrought him gains of $857 and $898, respectively.
1992 A much more exciting year. He challenged and defeated nine-term Democratic congressman Tom Downey. And he reported a net profit of $18,247 from his share of his law partnership. And he got to write off his partnership as a loss elsewhere on his tax return. And he made his first foray into stock option calls: a purchase of Boeing calls on January 6, 1992, and a profit of $156 four months later.
1993-1994 Hardly the big time. He dabbled in the market, selling two more Boeing call options in 1993 for a total reported capital gain of $332. He also listed "investment expenses" to Paine Webber of $170. In 1994, he reported no activity in short-term capital investing, like the trading of stock options or a turnaround of stock shares within that calendar year. His only stock activity, according to his 1994 tax return, was the sale of 100 shares of Boeing that he had bought in 1991. The result of that sale? A loss of $700.
1995-1996 He didn't even file a Schedule D return for capital gains and losses for 1995. And in 1996, he sold stock that he had held since at least 1989. He took a loss in all three separate deals, reporting a grand total of $5931 in losses in long-term capital gains (including a net long-term loss of $3 from his former law partnership).