Republican Senators Commit Insider Trading after Coronavirus Brief

Richard Burr, Jim Inhofe, David Perdue and Kelly Loeffler should go to jail.

Mandatory Credit: Photo by ERIK S LESSER/EPA-EFE/Shutterstock (10233062h) Republican Senator from North Carolina Richard Burr attends the Farewell Ceremony for Deputy Attorney General Rod Rosenstein at the Department Justice in Washington, DC, USA, 09 May 2019. Burr is chairman of the Senate Intelligence Committee, which subpoenaed Donald Trump Jr., the son of US President Donald J. Trump. Farewell Ceremony for Deputy Attorney General Rod Rosenstein in Washington, DC, USA – 09 May 2019

It is illegal for Members of Congress and other government employees to profit from their access to classified information not available to the public. At least four Senate Republicans cashed in after learning of the severity of the coming novel coronavirus.

WaPo (“Sen. Richard Burr (R-N.C.), head of powerful committee, sold large amount of stocks before sharp declines in market“):

Senate Intelligence Committee Chairman Richard Burr (R-N.C.), who had expressed confidence in the country’s preparedness for the coronavirus outbreak, sold a significant share of his stocks last month, according to public disclosures.

The sales included stocks in some of the industries that have been hardest hit by the global pandemic, including hotels and restaurants, shipping, drug manufacturing, and health care, records show.
Until about a week ago, President Trump and GOP leaders had projected optimism in the country’s ability to manage the global outbreak of the coronavirus.

As head of the powerful Intelligence Committee, Burr reportedly was receiving daily briefings on the threat of the virus. In mid-February, he sold 33 stocks held by him and his spouse, estimated at between $628,033 and $1.72 million, Senate financial disclosures show. It was the largest number of stocks he had sold in one day since at least 2016, records show. The Feb. 13 stock sales were first reported by the Center for Responsive Politics.

The Daily Beast appears to have broken the news on the second case (“Sen. Kelly Loeffler Dumped Millions in Stock After Coronavirus Briefing“):

The Senate’s newest member sold off seven figures’ worth of stock holdings in the days and weeks after a private, all-senators meeting on the novel coronavirus that subsequently hammered U.S. equities.

Sen. Kelly Loeffler (R-GA) reported the first sale of stock jointly owned by her and her husband on Jan. 24, the very day that her committee, the Senate Health Committee, hosted a private, all-senators briefing from administration officials, including the CDC director and Anthony Fauci, the head of the National Institute of Allergy and Infectious Diseases, on the coronavirus.

“Appreciate today’s briefing from the President’s top health officials on the novel coronavirus outbreak,” she tweeted about the briefing at the time.

AJC (“Perdue, Loeffler among senators whose stock trading during coronavirus raises questions“) reports that both Georgia Senators were involved in the scandal:

Georgia’s two U.S. senators bought and sold stocks during the same time they were receiving briefings on the coronavirus outbreak, leading to questions about whether they used inside information to guide their financial dealings.

U.S. Sens. David Perdue and Kelly Loeffler both were wealthy before they arrived on Capitol Hill, but there is new scrutiny surrounding financial decisions they and other members have made during the coronavirus pandemic.
Senate rules prohibit members from profiting off of inside information they learn through their elected offices that is not available to the public.
Perdue in nearly 100 transactions bought and sold in equal amounts, although exact figures cannot be determined because senators are only required to report transactions within ranges. Loeffler unloaded stocks at a much more rapid pace than she made purchases, taking money out of the market.

Loeffler’s, in tweets posted shortly after midnight, dismissed the criticism.

“This is a ridiculous and baseless attack,” she wrote. “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 said she wasn’t aware of transactions made in late January until Feb. 16, three weeks after they occurred.

A spokeswoman for Perdue said that his financial disclosures show no wrong-doing and that he also uses third-party money managers.

“Senator Perdue goes above and beyond to comply with current law and meet all Senate ethics requirements, he is not involved in any day-to-day investment decisions and uses an outside financial advisor to manage all assets and publicly report every transaction in a timely manner,” Cherie Gillan said.

Raw Story brings the number to four with their report “Republican Jim Inhofe dumped up to $450,000 in stock — the fourth GOP senator implicated in scandal.”

The GOP Senate Caucus faced a massive scandal on Thursday after multiple GOP senators revealed in public filings that they had sold large stock holdings after private briefings on the coronavirus scandal.

Sen. Richard Burr (R-NC), Sen. Kelly Loeffler (R-GA) and Sen. Ron Johnson (R-WI) have all be implicated in the scandal.

Now conservative Oklahoma Sen. Jim Inhofe has also been caught up, after reporting he sold in late February.

There have been calls for the implicated lawmakers to resign from office over the scandal.

Do I believe that some or all of these Senators don’t pick stocks themselves but rely on financial advisors? Sure. Do I believe that it’s just a coincidence that they sold off massive amounts of stock in a bull market right before a global economic meltdown in the days after they received a private briefing? No. No, I don’t.

To make matters worse, Burr was apparently tipping off his donors as well.

NPR (“Intelligence Chairman Raised Virus Alarms Weeks Ago, Secret Recording Shows“):

The chairman of the Senate Intelligence Committee warned a small group of well-connected constituents three weeks ago to prepare for dire economic and societal effects of the coronavirus, according to a secret recording obtained by NPR.

The remarks from U.S. Sen. Richard Burr were more stark than any he had delivered in more public forums.

On Feb. 27, when the United States had 15 confirmed cases of COVID-19, President Trump was tamping down fears and suggesting that the virus could be seasonal.

“It’s going to disappear. One day, it’s like a miracle. It will disappear,” the president said then, before adding, “it could get worse before it gets better. It could maybe go away. We’ll see what happens.”

On that same day, Burr attended a luncheon held at a social club called the Capitol Hill Club. And he delivered a much more alarming message.

“There’s one thing that I can tell you about this: It is much more aggressive in its transmission than anything that we have seen in recent history,” he said, according to a secret recording of the remarks obtained by NPR. “It is probably more akin to the 1918 pandemic.”

The luncheon had been organized by the Tar Heel Circle, a nonpartisan group whose membership consists of businesses and organizations in North Carolina, the state Burr represents. Membership to join the Tar Heel Circle costs between $500 and $10,000 and promises that members “enjoy interaction with top leaders and staff from Congress, the administration, and the private sector,” according to the group’s website.

In attendance, according to a copy of the RSVP list obtained by NPR, were dozens of invited guests representing companies and organizations from North Carolina. And according to federal records, those companies or their political committees donated more than $100,000 to Burr’s election campaign in 2015 and 2016. (Burr announced previously he was not planning to run for reelection in 2022.)

Thirteen days before the State Department began to warn against travel to Europe, and 15 days before the Trump administration banned European travelers, Burr warned those in the room to reconsider.

“Every company should be cognizant of the fact that you may have to alter your travel. You may have to look at your employees and judge whether the trip they’re making to Europe is essential or whether it can be done on video conference. Why risk it?” Burr said.

Sixteen days before North Carolina closed its schools over the threat of the coronavirus, Burr warned it could happen.

“There will be, I’m sure, times that communities, probably some in North Carolina, have a transmission rate where they say, ‘Let’s close schools for two weeks. Everybody stay home,’ ” he said.

And Burr invoked the possibility that the military might be mobilized to combat the coronavirus. Only now, three weeks later, is the public learning of that prospect.

Time, as they say, is money.

While it seems now that we’ve been talking about this crisis for months, it’s only been a few weeks. Indeed, China didn’t even announce the epidemic there until December 31. As best I can tell, the first mention of the outbreak at OTB was on February 15, and even then it was about whether it’s time to rethink Chinese investment, with the epidemic just one factor among many.

By February 28, world stocks were down $5 trillion.

Now, in fairness to Burr, US stocks and global stocks were already falling by the time of the luncheon. But President Trump and he himself were telling the general public that things weren’t that bad. Indeed, the President was telling people that the alarm was a Democratic hoax.

Political scandals are often complicated. There was enough messiness around, for example, the degree to which the Trump campaign colluded with the Russians to interfere in the 2016 election that those who wanted to dismiss the issue could. This one, though, is plain and simple: Senators used inside information to make themselves and their wealthy supporters rich while simultaneously lying to the American public in a way that almost certainly got a lot of people killed.

UPDATE: WaPo reports that Burr was one of only three Senators who voted against the STOCK Act of 2012, which applied existing insider trading laws to Members of Congress and their staffs.

FILED UNDER: COVID-19, Economics and Business, Health, US Politics
James Joyner
About James Joyner
James Joyner is a Security Studies professor at Marine Corps University's Command and Staff College and a nonresident senior fellow at the Scowcroft Center for Strategy and Security at the Atlantic Council. He's a former Army officer and Desert Storm vet. Views expressed here are his own. Follow James on Twitter @DrJJoyner.

Comments

  1. Argon says:

    Absolutely nothing new there. There has always been a number of people in every Congress that profited off insider deals since the start of the country. Maybe *now* they actually will make laws that apply to themselves too. But probably not, or perhaps the regulations will leave open container ship sized loopholes.

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  2. James Joyner says:

    @Argon:

    Maybe *now* they actually will make laws that apply to themselves too.

    They have, at least in this instance:

    The Stop Trading on Congressional Knowledge (STOCK) Act (Pub.L. 112–105, S. 2038, 126 Stat. 291, enacted April 4, 2012) is an Act of Congress designed to combat insider trading. It was signed into law by President Barack Obama on April 4, 2012. The bill prohibits the use of non-public information for private profit, including insider trading by members of Congress and other government employees. It confirms changes to the Commodity Exchange Act, specifies reporting intervals for financial transactions.

    The bill was introduced by Joe Lieberman, independent United States Senator for Connecticut, on January 26, 2012, and passed in the Senate by a 96–3 vote.[2] Later the House of Representatives passed it by a 417–2 vote.[3] The bill was supported heavily by vulnerable incumbents and signed into law by President Obama.[4] According to the current United States Senate Select Committee on Ethics, “A member, officer, or employee of the Senate shall not receive any compensation, nor shall he permit any compensation to accrue to his beneficial interest from any source, the receipt or accrual of which would occur by virtue of influence improperly exerted from his position as a member, officer, or employee.”[5]

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  3. Sleeping Dog says:

    Before one of the Trumpkins appears, the NYT’s is reporting that Diane Feinstein is among the senators who sold stock on what is effectively insider information.

    But since it’s the Times reporting it, it must be fake news.

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  4. Sleeping Dog says:

    Tim Miller at the Bulwark.

    But the best part—the cherry on top, really—is that Burr and Loeffler betrayed their country and their constituents in order to help sell Trump’s disinformation. And yet the moment they became liabilities, Trump’s posse on Twitter and Fox—and reportedly the President himself—turned on them. They let Trump hide his tax returns, they protected him from impeachment, they humiliated themselves defending him—only to be stiffed like a couple of Trump hotel contractors.

    This is the story of what happens when you put a career scam artist in charge of the indispensable nation and he finds himself in a historic crisis. That’s on Trump and the voters who chose him.

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  5. Scott says:

    And we still don’t have any insight into the Trump or Kushner family financial dealings, whether it is the President, Don Jr, Ivanka, Jared, or Eric.

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  6. Hal_10000 says:

    @Sleeping Dog:

    The Feinstein thing appears to be misreported. It was her husband who sold stock. And the stock rose after he sold it. Loeffler may have an excuse in that she’s extremely wealth and sells stock a lot. But Burr is clearly in deep.

    The problem here is twofold: that they lied to use about the seriousness of the situation and that they profited off of it. They were eager to protect their own fortunes. The lives of the American people? Not so much. If it’s shown that they did this, they should be force to resign or impeached.

    And … we need to have the President disclosed his finances. Let’s see if he’s embroiled in this. After all, if he’s not, he’s got nothing to hide, right?

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  7. Sleeping Dog says:

    @Hal_10000:

    Loeffler may have an excuse in that she’s extremely wealth and sells stock a lot.

    I don’t expect that Doug Collins will make that distinction in the upcoming primary.

    Since Feinstein’s term isn’t up till 2024, she will likely escape the criticism she’ll receive. Neither the right nor the left is going to allow this opportunity to pass, regardless of who issued the sell order.

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  8. Stormy Dragon says:

    Sen. Richard Burr (R-NC), Sen. Kelly Loeffler (R-GA) and Sen. Ron Johnson (R-WI) have all be implicated in the scandal.

    While I hate to defend Ron Johnson, since he’s a terrible senator, his transaction appears to be legit: his only transaction was selling a privately owned medical company to a private equity company. Since that sort of transaction takes months to complete, this was obviously started well before the coronavirus outbreak and just happened to close in early March.

    (not to mention that a medical firm would be something you would want to KEEP if you thought a pandemic was coming)

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  9. Daryl and his brother Darryl says:

    @Sleeping Dog:
    Apparently Feinstein’s Husband sold biotech stock’s (doesn’t make sense if you knew) at the bottom (the opposite of what you would do with insider info) of the market. Everything they sold is worth more now.
    I don’t think these things are connected.
    But that will not stop Guarneri et el.

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  10. Daryl and his brother Darryl says:

    @Stormy Dragon:
    Inhofe is implicated, now, too.

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  11. Kathy says:

    @Daryl and his brother Darryl:

    In fairness, it’s not the end result of a stock sale that matters, but whether it occurred because of inside information. As an analogy, a thief who breaks into a store to rob the til, can’t claim as proof of innocence that it only contained two pennies.

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  12. Daryl and his brother Darryl says:

    A couple thoughts on this…
    First…Not a single person should be shocked by this. This is Trump’s party. This is the manner in which Trump does business. Check Donnie Junior’s trades. I’ll bet you a case of really good DIPA that he bought a ton of stock for Malaria Drug makers yesterday morning, just before Daddies announcement about Malaria Drugs.
    Second…None of this means anything. Do you think Barr is going to go after these people? No. Of course not. Do you think McConnell is going to sanction them? Of course not. He’s got far more criminal activities happening with his wife. He’s laughing at the pettiness of this insider trading stuff.
    Drain the Swamp? Indeed.

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  13. Daryl and his brother Darryl says:

    @Kathy:
    Of course, this is correct.
    But if you were acting on inside information about a Pandemic, would you unload biotech stock? More likely you would buy, especially if that stock were a low ebb in cost. Just doesn’t make sense, from an insider trading pov.

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  14. Kit says:

    I’m starting to come around to the idea that cleaning up corruption is Job #1. If Biden could only commit to that, perhaps we could then move forward on global heating, inequality/oligarchy, misinformation/propaganda, and healthcare. This is perhaps the one area where the Executive, mostly acting alone, could make a difference.

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  15. OzarkHillbilly says:

    @Sleeping Dog: I have been reading that it was one single stock that her husband sold, one that had not been moving much. Time will tell.

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  16. Mister Bluster says:

    Sen. Richard Burr requests ethics probe into his stock sales
    Sen. Richard Burr (R-N.C.) said he’s asked the Senate Ethics Committee to review stock sales he made weeks before the markets began to sink in response to the coronavirus pandemic.

    Roberts, Pat (KS) Risch, James E. (ID) Lankford, James (OK), Chairman
    Coons, Christopher A. (DE), Vice Chairman
    Schatz, Brian (HI) Shaheen, Jeanne (NH)

    I hope they sit at least six feet apart when they hear this case.

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  17. Michael Reynolds says:

    Burr is perfectly safe from prosecution, we don’t have a Justice Department where Republicans are concerned. Bill Barr will do nothing.

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  18. Michael Reynolds says:

    @Mister Bluster:
    This is just a stalling tactic. Burr is in effect a war profiteer, but the GOP Senate isn’t going to do anything, just like the Trump DoJ. Open, unabashed corruption is what Republicans endorsed when they ‘acquitted’ the traitor in the White House.

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  19. DrDaveT says:

    @Stormy Dragon:

    While I hate to defend Ron Johnson, since he’s a terrible senator, his transaction appears to be legit: his only transaction was selling a privately owned medical company to a private equity company. Since that sort of transaction takes months to complete, this was obviously started well before the coronavirus outbreak and just happened to close in early March.

    Thank you for demonstrating once again the difference between Republicans and humans, and the vacuousness of the “both sides do it” plaint.

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  20. Stormy Dragon says:

    @Michael Reynolds:

    Burr may not be safe from Barr. Apparently MAGA-world sees him as insufficiently loyal because he’s been blocking the Biden “investigation” and some of of Trumps appointees, like Richard Grinell.

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  21. Michael Reynolds says:

    @Stormy Dragon:
    NC has a Democratic governor. Assuming they have the usual governor-appointed replacement system the GOP won’t ever risk losing the Senate over a mere crime.

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  22. Stormy Dragon says:

    @Michael Reynolds:

    North Carolina does have governor-appointed replacements, but the law granting that power specifically requires the replacement be from the same party as the senator being replaced.

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  23. Sleeping Dog says:

    @Stormy Dragon:

    Hey Charlie, change your party reg from Dem to Rethug, the gov wants to appoint you to the senate.

    Does the law have a timeline for party membership?

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  24. Pylon says:

    @Stormy Dragon: Burr is also not running again so he may well be sacrificed.

    The most odious thing is that, not only did he dump stock, he concurrently downplayed the virus to the public.

    Feinstein has a blind trust defence. Loeffler has an “I’m so rich this just a rounding error” defence. I’d love for Johnston to go down on this, but we’ll see what the facts are on his. I’m not sure the fact it’s a single transaction of a private company saves him.

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  25. Steve V says:

    As Matt Bernius originally said when he dropped this in the other thread, let’s not lose sight of the attendees of the Burr event. Does anyone know if any intrepid journalists are looking into them?

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  26. Daryl and his brother Darryl says:

    @Mister Bluster:

    Sen. Richard Burr (R-N.C.) said he’s asked the Senate Ethics Committee to review stock sales

    An ethics committee in a Republican Senate…ROTFLMAO.

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  27. al Ameda says:

    Is it tacky to wonder if any of the Trump family – Eric, Don Jr, Ivanka (Jared) and Trump himself – traded on information concerning the looming virus problem?

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  28. Pylon says:

    Apparently Feinstein wasn’t at the briefing in question.

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  29. Michael Reynolds says:

    @Stormy Dragon:
    Ooooh, interesting!

    ReplyReply
  30. CSK says:

    Altogether now…Lock them up! Lock them up! Lock them up!

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  31. An Interested Party says:

    I noticed in the daily “briefing” that this issue was brought up by a reporter and slimy Trump only mentioned Feinstein, when a reporter mentioned other senators he wanted to know why the reporter didn’t mention Feinstein…this trash in the White House…

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  32. Kari Q says:

    Am I the only one who is more upset that the Senators in question where still talking about how everything would be fine and covid-19 wasn’t a threat when they clearly knew that wasn’t true than I am at their selling stocks? That seems the bigger issue to me. They were all willing to risk people’s lives rather than tell the truth.

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  33. Chris Nelson says:

    I don’t clearly understand all the outrage over these stock sales.
    “Insider trading”?
    Exactly what is the “insider” information these people supposedly had that enabled them to sell at just the right time before the market tanked?
    What seems more apparent is that they knew they held stock in companies that were vulnerable to the effects of a pandemic and they simply guessed right as to the timing of their sale.
    There was plenty of public media coverage to suggest that the virus problem might well be serious and widespread, such than any sensible investor might have made the same decisions as were made here.

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  34. de stijl says:

    Drain the swamp!

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  35. An Interested Party says:

    @Kari Q: Perhaps the reason that more people aren’t as upset about that is because such behavior is so common with Trump and his minions that it has become the standard, like the way people aren’t really shocked anymore with all the lies Trump tells…

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  36. James Joyner says:

    @Chris Nelson:

    What seems more apparent is that they knew they held stock in companies that were vulnerable to the effects of a pandemic and they simply guessed right as to the timing of their sale.

    That’s just absurd. They literally made the sales immediately after getting a classified briefing on the severity of the crisis.

    There was plenty of public media coverage to suggest that the virus problem might well be serious and widespread

    The President of the United States and these Senators were literally telling the American public that the virus was no big deal and that overreaction to it was a creation of the lying liberal media and a Democratic hoax at this point in the crisis.

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  37. An Interested Party says:

    I don’t clearly understand all the outrage over these stock sales.

    And this, ladies and gentlemen, is a prime example of why we have a conman in the White House and a major political party willing to do anything to stay in power, including working to make it harder for people to exercise their right to vote…real democracy means little to this crowd, and people like the person who made the statement above are either oblivious or condone such rancid behavior…

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