Friday, October 30, 2020

U.S. senators accused of insider trading amid coronavirus crisis


Republican senator Richard Burr faced demands to resign on Friday after it was reported that he sold off millions of dollars’ worth of stocks just before the market dropped amid fears of the coronavirus pandemic.

Burr, of North Carolina, the chairman of the Senate intelligence committee, denied he had kept the public in the dark about the scale of the threat as three other senators also came under scrutiny for selling major holdings in the same period.

Burr and his wife sold between around $628,000 and $1.7m in more than 30 separate transactions in late January and mid-February, ProPublica and the Center for Responsive Politics reported. Several of the stocks were in companies that own hotels.

On Friday, Burr asked congressional investigators to probe whether his actions amounted to insider trading. “I relied solely on public news reports to guide my decision on the sale of stocks February 13,” he said in a statement.

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Two weeks after the sales, on 27 February, Burr made a speech in Washington in which he predicted dire consequences from the coronavirus, including school closures and cutbacks in company travel.

Burr told a small audience that the respiratory infection was “much more aggressive in its transmission than anything that we have seen in recent history” and “probably more akin to the 1918 pandemic”, an audio recording obtained by National Public Radio revealed.

Burr responded on Twitter, accusing NPR of “a tabloid-style hit piece” that misrepresented his speech and claiming that Americans were already being warned about the effects of the virus at the time. “The message I shared with my constituents is the one public health officials urged all of us to heed as coronavirus spread increased,” Burr wrote. “Be prepared.”

There is no evidence that Burr had any inside information as he sold the stocks or spoke to the audience in North Carolina. The Senate intelligence committee did not have any briefings on the pandemic the week when most of the stocks were sold, a source told the Associated Press.

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The three other senators known to have sold off substantial holdings just before the market dropped were Kelly Loeffler of Georgia, whose husband is the chairman of the New York Stock Exchange (NYSE), Democrat Dianne Feinstein, of California, and Republican Jim Inhofe, of Oklahoma.

Loeffler, the newest member of the Senate, sold off stocks worth seven figures, starting on the day she and other senators received a private briefing about the coronavirus from administration officials and Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases.

The Daily Beast said Loeffler and her husband, Jeffrey Sprecher, the chairman of the NYSE, made 29 transactions up to mid-February, all but two of which were sales. “One of Loeffler’s two purchases was stock worth between $100,000 and $250,000 in Citrix, a technology company that offers teleworking software and which has seen a small bump in its stock price since Loeffler bought in as a result of coronavirus-induced market turmoil,” the site reported.

Loeffler responded forcefully to deny any wrongdoing. At 12.25am on Friday she tweeted: “This is a ridiculous and baseless attack. I do not make investment decisions for my portfolio. Investment decisions are made by multiple third-party advisors without my or my husband’s knowledge or involvement.”

Loeffler, a finance executive appointed to the Senate in January to succeed the retiring Johnny Isakson, added: “As confirmed in the periodic transaction report to Senate Ethics, I was informed of these purchases and sales on February 16, 2020 – three weeks after they were made.”

Feinstein, who sits with Burr on the intelligence committee, with her husband sold $1.5m to $6m worth of stock in a California biotech company on 31 January and 18 February. A Feinstein spokesman told the New York Times the senator’s assets are in a blind trust and that she has no involvement in her husband’s financial decisions.

On 27 January, Inhofe, a Republican from Oklahoma, sold $400,000 worth of stock. His office has not responded to the disclosures.

There were widespread expressions of anger and disbelief at the senators’ alleged conduct. The Democratic congresswoman Alexandria Ocasio-Cortez called for both Burr and Loeffler to resign. “It is stomach-churning that the first thoughts these Senators had to a dire & classified #COVID briefing was how to profit off this crisis,” she wrote on Twitter. “They didn’t mobilize to help families, or prep response. They dumped stock.”

Studies in 2004 and 2011 showed members of the House and Senate’ stocks outperformed the market by 6% annually and 12% annually, respectively. Under Barack Obama, Congress passed a law to prevent members from using inside information to profit, but critics say those measures are riddled with loopholes.

Walter Shaub, the former head of the Office of Government Ethics, posted: “Investigation is needed to find out if laws were broken by senatorial stock dumps. But whether or not they were, we have politicians in the government’s inner circle protecting their interests as the storm closed in on regular Americans who will do the suffering and the dying.”

More surprisingly Tucker Carlson, a host on conservative Fox News, joined in the calls for Burr to step down. “Maybe there is an honest explanation for what he did,” Carlson told viewers. “If there is, he should share it with the rest of us immediately. Otherwise he must resign from the Senate and face prosecution for insider trading.

“There is no greater moral crime than betraying your country in a time of crisis. And that appears to be what happened.”

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