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Elaine Chao sold stock in companies after report raised ethics issue

Washington(CNN) Transportation Secretary Elaine Chao sold stocks in two companies after a Wall Street Journal report revealed she held onto them after she pledged to sell them, a Transportation Department spokesperson confirmed to CNN.

The spokesperson said the issue was due to a misunderstanding about Chao's ethics agreement. The secretary sold her stock in both Ingersoll Rand, an industrial manufacturing company, and Vulcan Materials, a construction company, the spokesperson said.

In Chao's ethics agreement, she agreed to resign from her positions with both companies so as not to have any conflicts of interest as transportation secretary. Chao said in the agreement that she would receive a "cash payout" for her retainer stock in Ingersoll Rand and vested deferred stock units in Vulcan Materials when she resigned from her positions.

Chao's 2018 financial disclosure form with the Office of Government Ethics also said that she would receive a cash payment from Vulcan Materials.

But a Wall Street Journal review found that Chao still held stock in Vulcan Materials. Instead of receiving a cash payout from the company, she received a stock payout and continued to hold the stock rather than sell it, according to the Journal.

"Secretary Chao received stock in Ingersoll Rand and Vulcan Materials as part of the deferred compensation packages with these companies. The deferred compensation was paid out in the form of stock, according to the companies' plans over which the Secretary has no control," the Transportation Department spokesperson told CNN.

The spokesperson said that "due to a misunderstanding," the secretary's ethics agreement "mis-characterized" the transactions as cash payouts instead of stock payouts. The spokesperson said her most recent financial disclosure forms have been updated to reflect that.

Transportation ethics officials told Chao there was no conflict of interest with her holding those stocks, but the secretary divested from them anyway, according to the Transportation spokesperson.

Chao has been recused from all matters involving these companies, and she has now sold the stocks, meaning she has no financial interest in either company, the spokesperson said.

CNN's Eli Watkins contributed to this report.
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