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FTC Stands Behind Ethics Chief Amid Stock Ownership Controversy

The Federal Trade Commission (FTC) is facing scrutiny after it was revealed that its ethics chief, Lorielle Pankey, owned stock in Meta while recommending FTC Chair Lina Khan to recuse herself from a case involving the company. In response, the agency’s Democratic commissioners, including Khan, issued a statement defending Pankey and emphasizing her adherence to ethical rules.

Pankey, a Harvard law graduate serving as the FTC’s associate general counsel for ethics, raised concerns in an August 2022 memo about Khan’s impartiality in evaluating Meta’s proposed $400 million acquisition of virtual reality developer Within. Pankey cited statements made by Khan before joining the FTC, including her stance against further acquisitions by Meta. However, Khan decided not to recuse herself, and the FTC’s lawsuit to block the Within deal on antitrust grounds was unsuccessful.

According to public financial disclosures, Pankey owns Meta stock in a joint account, with an estimated value between $15,001 and $50,000. While it is legally permissible for federal officials to invest in companies under their agencies’ oversight, this practice has drawn criticism from watchdog groups. The Revolving Door Project recently submitted a letter to the FTC’s Office of Inspector General, urging an investigation into Pankey’s conduct and potential conflicts of interest.

In her defense, Pankey asserted that she followed ethical guidelines and sought guidance from the Office of Government Ethics before assuming her role. She claimed that her ethics advice did not constitute personal and substantial participation in the matter, which would constitute a criminal conflict of interest. Pankey maintains that she remains fully compliant with ethical standards and vehemently denies any wrongdoing.

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The controversy surrounding Pankey’s ownership of Meta stock raises questions about potential biases and conflicts of interest within the FTC. Critics argue that her personal investment in a company being evaluated by the agency may have influenced her judgment. The FTC’s steadfast support of Pankey indicates their confidence in her dedication and adherence to the rules set forth by the Office of Government Ethics.

As the situation unfolds, the FTC will likely face further scrutiny from watchdog groups and calls for greater transparency and accountability in addressing potential conflicts of interest among its staff. The outcome of this controversy will have implications for the agency’s reputation and the public’s trust in its ability to preserve fair competition and combat unlawful business practices.

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