On 12 April 2017, the partisan web site Crooks and Liars reported that Attorney General Jeff Sessions owns shares in the private prison industry and stands to gain financially from some of his recent policy announcements:

It’s more than a conflict of interest. The more people Attorney General Jeff Sessions sends to private prisons, the more money he shoves in his pockets. From announcing he wants federal law enforcement agencies to bust people for a little bit of weed, to ordering federal prosecutors to find ways to convict more immigrants, Sessions is looking for ways to provide more clients to private prisons that are contracted by the federal government… …As Attorney General Sessions fills these private prisons, he is making money. According to his latest financial disclosures required by congress, dated December 23, 2016, he divested of other investments that were found to be in conflict. In these disclosures, he also lists numerous Vanguard funds. Vanguard owns more private prison stock than any other investment management company.

A popular meme also broadcast this claim:

The article lists three funds that Sessions has shares in, all of which are managed by the investment firm Vanguard, and claims that the funds contain holdings in two leading companies in the private prison industry: CoreCivic and GEO Group. This is true of only two of those funds.

The third seems to be listed as the result of a mix-up. The article rightly states that one of these funds, the Vanguard Total International Stock Index fund, contains holdings in “GEO Holdings Corporation”. However, this is a Japanese company that has no relation to the Florida-based private prison company GEO Group, as confirmed to Snopes.com by a spokesperson for GEO Group.

As for the other two investment funds, federal financial disclosure records show that the Attorney General owns between $31,003 and $115,000 worth of shares in the Vanguard Total Stock Market Index Fund, yielding a total of between $1,403 and $4,500 in income per year for Sessions.

And this fund does indeed include CoreCivic and GEO Group:

However, what the article does not mention is that CoreCivic and GEO Group constitute just two out of 3,557 companies in the Vanguard Total Stock Market Index Fund.

Vanguard Total Stock Market Index Fund is what’s known as an Excepted Investment Fund (EIF) – that means the fund is independently managed (that is, not by Sessions himself), and either publicly traded or “widely-diversified” (that is, it doesn’t focus on one particular sector of the economy), according to the Office of Government Ethics.

A brief look at this particular fund shows that its more than 3,500 holdings relate to companies from throughout the economy, including well-known names such as Cracker Barrel, Zillow and Rite Aid.

The same is true of the Vanguard Small-Cap Index fund, in which Sessions has between $15,001 and $50,000 worth of shares, yielding between $201 and $1,000 in income for him, per year.

While it does include holdings in CoreCivic and GEO Group, these are just two of 1,422 companies listed in the fund, which come from a variety of sectors and include names like Domino’s Pizza and JetBlue Airways.

According to Kathleen Clark, a Professor at Washington University School of Law and an expert on legal and government ethics, investments in widely-diversified funds such as these are unlikely to leave a public official vulnerable to conflicts of interest.

If it’s a diversified fund as opposed to being a sector fund [focused on one sector of the economy], then it’s not subject to the conflict of interest statute.

Clark told us that even if one or two companies in a widely-diversified fund were to perform well and increase their value, the presence of a large number of other companies in that fund means “It is exceedingly unlikely that such an interest would influence the government official, or that the public would perceive that as a significant risk.”

This is because income from a widely-diversified fund, like the two we’re examining, is based on the aggregate value of the companies within that fund.

Remember that in one fund, CoreCivic and GEO Group represent two out of 3,557 companies, and in the other, they represent two out of 1,422. Now remember that the Attorney General’s total annual income from the first fund is between $1,403 and $4,500 and from the second fund, it’s between $201 and $1,000.

So while it’s true that Jeff Sessions has some shares in funds that include holdings in two private prison companies, it’s misleading to say that this means he stands to gain in any meaningful way from an increase in the value of those companies, or that “The more people Attorney General Jeff Sessions sends to private prisons, the more money he shoves in his pockets.”

The Attorney General’s annual income from these funds – which is relatively low – depends on the overall performance of those funds. A surge in the value of CoreCivic or the GEO Group would very quickly be cancelled out by a dip in the value of just a handful of the thousands of other companies included in those two funds, and because these are widely-diversified Excepted Invested Funds, they don’t fall foul of conflict of interest regulations.