Texas Rep. Pat Fallon dumped Microsoft stock before Pentagon nixed $10B JEDI contract
July 14, 2021
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A congressman who supervises the Defense Department’s tech spending dumped up to $250,000worth of Microsoft stock two weeks before the Pentagon revealed it was canceling a $10 billion contract with the software giant, according to public documents.
US Rep. Pat Fallon, a Texas Republican who sits on a key subcommittee overseeing the Department of Defense’s technology policy, sold between $100,000 and $250,000 of Microsoft shares on June 21, government disclosures show.
Two weeks later, the Pentagon made the surprise announcement that it would cancel a $10 billion cloud computing contract — called JEDI, or Joint Enterprise Defense Infrastructure — that it had awarded to Microsoft in 2019 after the company fought a bidding war and legal battle against Amazon.
Fallon, who was elected last year to represent a northeastern district of the Lone Star State, is a member of the House’s Subcommittee on Cyber, Innovative Technologies, and Information Systems. According to the subcommittee’s site, Fallon and his colleagues have "jurisdiction over Department of Defense policy related to the acquisition of computer software."
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If members of Congress or their families trade stocks based on nonpublic information, they can be prosecuted under the STOCK Act passed in 2012.
In an audio recording that Fallon’s press secretary Luke Ball sent to The Post, the congressman said the trades were actually part of a bet that Microsoft stock would go up. On May 26, he said he bought 1,000 shares of Microsoft stock at $250.91. He said he then sold an option called a "covered call" to another investor and was paid $5,041 in return.
"The option was called about three to four weeks later and at that moment I no longer owned — the other people made the money from the stock rising — I no longer owned Microsoft stock," Fallon said.