Amended state-mandated documents reveal that it took Menlo Park City Council member Catherine Carlton six months to sell Facebook shares after learning her husband owned company stock.
Last month, The Almanac reported that Carlton owned, through her husband's investment portfolio, Facebook shares when she voted on two major projects that bolstered the tech giant's development prospects in November 2016, which may be a political ethics violation.
She told The Almanac she didn't know the shares had been purchased for her husband's investment portfolio, and learned of the matter only in late March 2017. She said the shares were sold shortly thereafter.
According to documents Carlton filed with the California's Fair Political Practices Commission (FPPC), she owned between $10,001 and $100,000 in Facebook shares, purchased Sept. 14, 2016. She reported finding that she owned the shares just prior to filing a mandatory form disclosing her economic interests April 3, 2017.
But according to a recently amended version of that form, filed April 30, 2018, Carlton's shares were not sold until six months afterward, on Oct. 2, 2017.
Carlton told The Almanac that an independent financial adviser had purchased the stock for her husband's retirement fund, and she learned she was a shareholder only when she went to file her Form 700, a mandatory document elected officials and government workers fill out to lay out their economic ties and potential sources for conflicts of interest.
In a written statement she sent to The Almanac, Carlton said, "My husband and I gave clear instructions to his financial adviser not to buy any stock related to Menlo Park and he assured us that he knew the rules and would act accordingly. I had no reason to think that he would act differently, and am upset that he made this mistake."
She said that when she learned the investment manager had bought the stocks, which were held under her husband's name in a separate account, she asked the shares to be sold "in March or soon thereafter."
Later, in July, she said, she followed up with the investment manager's office, and asked for the date that the shares had been sold. She reported that the office staff told her they'd look into it.
After additional attempts to get that information, she said, she was informed in September that the request to sell the shares had been ignored, because the investment manager "does not typically carry out investment directions from one spouse when an account is held in the other spouse's name."
Carlton said her husband then demanded the shares be sold, and they were on Oct. 2, 2017.
During the time her household owned the stock, Facebook's share value rose by 32.6 percent. From the time she says she was aware of the stocks (April 3, 2017) and the time they were sold, Facebook's share value rose by 19 percent. She reported that her household earned $5,500 from the shares.
She added in the statement to The Almanac: "I have been careful to recuse myself from participating in any decisions that I knew would have a reasonably foreseeable material financial effect on Facebook."
She said she has self-reported the issue to the FPPC and is "working with them through the process to resolve it all."
While the period between April and October 2017 involved little direct council discussion about Facebook, the company's ties to the city have become so entangled there are some matters that raise questions about whether there is a conflict or not. During the six months Carlton knew about the shares but had not sold them, a number of Facebook-tied projects were brought before the council that she did not recuse herself from.
One of those matters was the creation of a new police unit, which Facebook offered to fund as part of a development agreement with the city for its expansion along Bayfront Expressway. She voted on Sept. 26 to accept Facebook funding for the initiative of about $11.2 million over five years on Sept. 26.
Another was a discussion in September of the findings of a Facebook-funded study by SamTrans looking at ways to ease congestion along the Dumbarton corridor. SamTrans has since reported it may enter an exclusive negotiation process with Facebook to try to accelerate the development of improved transportation options along the Dumbarton corridor.
In addition, there were a number of closed-session meetings during which the council discussed litigation between the city and the city of East Palo Alto. The lawsuit arose, in part, due to concerns that Facebook's proposed "Willow Village" and other development in Menlo Park's recently upzoned territory in the eastern part of the city would move forward without extensive environmental analysis. That lawsuit was eventually settled last December.
During that time, the council also received informational updates on the company's expansion plans along Bayfront Expressway and Willow Road.