Justice Department launches inquiry of senators who sold large chunks of stock before coronavirus market slide
Federal authorities are reviewing the stock sales of four lawmakers just before the market slide triggered by the coronavirus outbreak, a person familiar with the matter said Monday.
Financial disclosure statements indicated that Sens. Richard Burr, R-N.C.; Jim Inhofe, R-Okla.; Kelly Loeffler, R-Ga.; and Dianne Feinstein, D-Calif.; their spouses or advisers sold large chunks of stock around the time lawmakers received behind-the-scenes briefings about the severity of the coronavirus, which has claimed more than 2,900 lives in the USA.
The senators denied any wrongdoing, and Burr asked the Senate Ethics Committee to review his transactions involving up to $1.6 million. The federal inquiry, which was in its early stages, was first reported by CNN.
A Justice Department spokeswoman declined to comment Monday
Burr and his wife sold the stocks in February, according to disclosure statements. Lawmakers are not required to disclose exact transaction values and instead report ranges for transactions that exceed $1,000.
The North Carolina senator, chairman of the Intelligence Committee, asserted that he made the trades based on news reports about COVID-19, not on private information that flowed from government briefings.
“The law is clear that any American – including a senator – may participate in the stock market based on public information, as Sen. Burr did,” Burr’s attorney, Alice Fisher, said Monday. “When this issue arose, Sen. Burr immediately asked the Senate Ethics Committee to conduct a complete review, and he will cooperate with that review as well as any other appropriate inquiry. Sen. Burr welcomes a thorough review of the facts in this matter, which will establish that his actions were appropriate.”
According to disclosure statements, Loeffler and her husband, New York Stock Exchange Chairman Jeffrey Sprecher, sold $1 million to $2.49 million in February, according to disclosure statements.
Inhofe sold $50,000 to $100,000 in stock Feb. 20, and Feinstein’s disclosure report shows sales of $1 million to $5 million in stocks.
Loeffler, Inhofe and Feinstein said that their financial transactions were handled by third-party advisers, or in Feinstein’s case, as part of blind trust and that they made no personal decisions on the moves.
The 2012 Stock Act specifically prevents members of Congress from trading stocks based on nonpublic information they learn as part of their duties as lawmakers. Burr was one of three senators who voted against the law.
The Securities and Exchange Commission, in a statement last week, issued a warning against the use of insider information, highlighting “the importance of maintaining market integrity.”
“Those with such access – directors, officers, employees, and consultants and other outside professionals – should be mindful of their obligations to keep this information confidential and to comply with the prohibitions on illegal securities trading,” the SEC Enforcement Division said. “Trading in a company’s securities on the basis of inside information may violate the anti-fraud provisions of the federal securities laws.”
The statement made no reference to the accounts of the lawmakers’ trades.
Burr has drawn strong rebukes from colleagues, including one of President Donald Trump’s fiercest allies in Congress, Rep. Matt Gaetz, R-Fla., who called for the senator’s removal as Intelligence Committee chairman.
Gaetz tweeted Monday that Burr should no longer hold the sensitive post, where he has been privy to closed-door briefings about the unfolding crisis.
“How can @senatemajldr justify leaving someone as the Chairman of the Intelligence Committee … who is being investigated by the FBI for criminally abusing their position for personal, financial gain?!?!” Gaetz tweeted at Senate Majority Leader Mitch McConnell, R-Ky. “Republicans need to do a better job cleaning our own house.”