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Last month, an aide to the government efficiency office of the country’s Consumer Watchdog Agency was told by an ethics lawyer that he owns stock in the company as prohibited by employees, and people familiar with the warning advised not to take part in actions that could personally benefit.
But a few days later, Gavin Kliger, a 25-year-old software engineer who has been detailing the Consumer Financial Protection Bureau since early March, went ahead anyway and took part in a massive agency layoff, including the firing of the ethics lawyer who warned him, according to court records.
Experts said Kliger’s actions, first reported by Propublica last week, constitute a conflict of interest that could violate federal criminal ethics laws. Such measures are designed to prevent federal employees from serving the public interest and enriching themselves using government power. CFPB, which regulates companies that provide financial services, has strict bans on investments that employees can maintain.
As previously reported by Propublica, Kliger owns up to $365,000 worth of stocks in Apple Inc., Tesla Inc. and two cryptocurrencies. Investments in these companies are not restricted to employees as the bureau can regulate them. Additionally, reviews show that he is investing in more companies on the agency’s “banned holdings” list. Kliger also revealed that it owns up to $350,000 worth of shares in Google Parent Alphabet Inc., Warren Buffett’s Berkshire Hathaway, and Chinese e-commerce company Alibaba.
That means, at most, Kliger can own as much as $715,000 in seven banned companies, records show.
Experts said it is unlikely that exhausted consumer watchdogs will actively regulate them and other companies, releasing compliance costs and risks associated with testing and enforcement actions. This could raise the stock price and bring profits to investors like Kliger.
Don Fox, a former advisor to an independent federal agency that advises administrative workers on ethical obligations, said “this appears to be a rather clear violation” of the Federal Criminal Disputes Act.
The fact that Richard Brifor, a government ethics expert at Columbia Law School, was warned not to take action that could benefit him, stated that “he realizes that this is a problem, not by accident or unintentional.”
But Brifor said there would be no replies for Krigger’s actions given that under President Donald Trump, the Justice Department “has been heavily taken away by public integrity, ethics and public corruption as their problems.” The New York Times reported last week that the section handling such cases rests on a handful of lawyers.
From the beginning, the Trump administration has been plagued by ethics theorist struggles, from the president’s own entry into the cryptocurrency industry to the dual role of Elon Musk as both the head of the Doge and the leading federal contractor. Krigger’s case “is a great example of how they’re violating the law, even at this micro level, and they act like people don’t trust what they’re doing because there’s no doubt that these companies will benefit,” says Kathleen Clark, a government ethics expert at Washington University in St. Louis.
Kliger did not return calls or emails for comment. The CFPB did not respond to requests for comment.
The White House did not answer questions about the warning: whether Krigger was seeking an ethics exemption or whether he was in the process of selling. Instead, the spokesman provided Propublica with the same statement as before, writing that Kliger “did not even manage the layoffs” and that he “completely lied this whole story.” A spokesperson said Krigger had it to sell until May 8th.
The April 10 ethics warning came amid a fierce legal battle over the future of the CFPB.
The next day, the Washington, D.C. Court of Appeals allowed Russell Vert, the agency’s acting director, to carry out the mass shootings after a lower court judge stayed. The court directed the VACT to carry out a “special evaluation” of the department and to fire only employees deemed “necessary” to fulfill the agency’s legally necessary duties. In the court’s application, the government said the review was conducted by Mark Paletta, the department’s chief legal officer, and two other lawyers. In court documents, Paoletta said the cut was designed to achieve a “rationalized right-sized office.”
On April 13, Kliger was one of a small team of Doge and agency staff who received an email about the next layoff in the subject “CFPB RIF Work” (Government Terms for Government Reductions), according to an email produced in court records. Vought’s email will be edited in filing, but hours after he sent it, records show that the department’s chief information officer wrote to Kliger and another Doge aide about “following up the Russ memos below,” and advised Kliger, “we need to make it possible for what we need.”
Layoff notifications for employees of more than 1,400 stations were released on April 17th.
In the previous 36 hours, he notified him, “Gavin was screaming at people who didn’t believe he was working fast enough,” and “calls him incompetent,” a federal employee of a layoff team written under the pseudonym that Alex Doe wrote in an oath declaration filed by his lawyers for union members who the administration was trying to stop the bureau from releasing the bureau.
Among those laid off were the “whole team” of agency ethics officers and lawyers, court records show.
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These are the very employees who have twice notified Kliger that they need to identify investments in companies on the bureau’s prohibited list of holdings. The warning was explicitly instructed him not to participate in any bureau activities that could benefit companies that own the stock he owns, said someone familiar with the notice, who spoke on the condition of anonymity because of its sensitivity.
Last week, the appeals court overturned the course and temporarily halted the CFPB’s shooting amid gusts of legal challenges. Agent staff then notified more than 1,400 fired employees who were said to have been let go that the pink slip had been cancelled.
However, the court’s fight over the future of the CFPB is underway with oral debate ahead of the appeal judge in Washington, D.C., scheduled later this month.
