Assessing Claims About Michael McCaul’s Investments

President Joe Biden signed a bill last week that could ban Chinese social media platform TikTok. The bill, introduced by House Foreign Affairs Committee Chairman Michael McCaul, gives parent company ByteDance up to 12 months to sell the platform or face restriction in the U.S.

Users on platforms including X and Facebook have accused McCaul of benefiting financially from his own bill by investing heavily in shares of rival social media company Meta. According to the posts, McCaul invested $450,000 in Meta after he authored the bill, and an additional $700,000 once the bill looked likely to pass. “Now obviously the word most people are using here is suspicious, but the word we should be using is criminal,” says TikTok user The Older Millennial in a video with more than 214,000 likes and 69,000 shares. “WOW 🚨 Congressman Michael McCaul Who Wrote The TikTok Ban Bill Invested $1.15 Million Into META After Writing The Bill,” reads a reposting of the video on Twitter with more than 2.6 million views.

While McCaul indeed reported multiple trades of Meta stock in March, the posts inflate the amount invested and are incorrect in suggesting that McCaul executed the trades himself. A third-party investment manager that directs investments for McCaul’s wife and her family purchased the shares and also sold Meta stock in March. Additionally, McCaul supported restrictions on TikTok long before the March transactions occurred.

“Chairman McCaul has publicly expressed his concerns about the national security threat TikTok poses for years,” Leslie Shedd, a spokesperson for McCaul, told The Dispatch Fact Check in a statement. “He introduced his own bill to ban TikTok early last year—more than a year before these stock purchases were made. They have no bearing on the congressman’s policy priorities.”

What do we know about the trades?

Members of Congress are subject to laws requiring the disclosure of investments made by themselves and direct family members. The 1978 Ethics in Government Act mandates that congressional members, officers, and senior congressional staff file Periodic Transaction Reports (PTR) listing all purchases, sales, or exchanges of stocks, bonds, and other securities by the individual, his or her spouse, or a dependent child. Transactions valued below $1,000 and trades of widely held and diversified investment funds, such as exchange traded funds, are exempted. Additionally, the Stop Trading on Congressional Knowledge (STOCK) Act of 2012 more broadly restricts members of Congress from leveraging nonpublic information gained through their official positions for financial gain.

So far in 2024, McCaul has filed three PTR forms: one each in February, March, and April. The three reports include more than 500 total transactions, all but one of which took place within limited partnerships linked to the family of McCaul’s wife. The single transaction outside of these limited partnerships was the purchase of a money market fund by a trust benefiting McCaul’s children. McCaul, considered one of the wealthiest members of Congress, gained most of his net worth through his wife, Linda Mays McCaul, the daughter of Clear Channel Communications founder Lowry Mays. In 2011, New York Magazine reported that McCaul’s net worth had grown to more than $290 million, mostly due to an “influx of spousal wealth” derived from the Mays family’s communications fortune.

All reported transactions involving Meta in 2024 were executed by LLM Family Investments LP, a limited partnership controlled by the Mays family and managed by a third-party investment firm. A limited partnership serves as an investment vehicle for a group of individuals, who each hold ownership interests in the partnership and contribute investment capital. The partnership is managed by a general partner, and earnings are distributed to each limited partner based on their overall ownership interest. This means that when the Mays’ limited partnership buys or sells an asset, a portion of that purchase or sale is reported as belonging to McCaul’s wife and children and resultantly recorded on McCaul’s PTRs. These transactions, however, only appear in Rep. McCaul’s filings because of spousal and dependent reporting requirements: McCaul himself is not a member in the limited partnership, he receives no direct compensation from its appreciation, and he has no direction over its investment strategy.

“Congressman McCaul did not purchase these stocks and had no advanced knowledge of the purchase,” Elliot Berke, attorney for Rep. McCaul, said in a statement to The Dispatch Fact Check. “He only learned about [the trades] due to the PTR disclosure process. Rather, his wife has assets she solely owns, and a third-party manager made the purchase without her direction.”

LLM Family Investments LP reported sales of Meta stock for both McCaul’s wife and children on February 21, 2024, totaling between $30,000 and $100,000, followed by purchases on March 1, 5, and 22 totalling between $365,000 and $850,000. On March 25, the limited partnership sold between $500,000 and $1 million of Meta shares before purchasing between $130,000 and $300,000 in new shares on March 26 and 28. While it isn’t clear why the limited partnership sold and purchased Meta shares successively in March, there are many legitimate reasons that transaction might be executed by a portfolio manager. The limited partnership similarly reported multiple trades of Meta stock in 2022 and 2023, and earlier financial disclosures filed by McCaul indicate that the partnership has owned shares of the company since at least 2013.

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