House members, Senate aides traded stocks in early days of coronavirus
The trades show that — as much of the public was blindsided by both the pandemic and the economic meltdown over the last two weeks — a number of lawmakers, aides and their brokers helping manage their portfolios adjusted their investments. Lawmakers in both chambers were being briefed via both classified and non-classified meetings about the coronavirus in late January and February, giving people on Capitol Hill a closer look at how the coming pandemic might shape their lives and finances that much of the country was lacking.
“The reality is that if you work on the Hill, or you work in government, you have access to information that the public doesn’t have or, if they have it, they can’t always see the signal through the noise,” said Meredith McGehee, executive director of the watchdog group Issue One. “If you’re on the HELP Committee, you’re going to grasp threats much faster than the general public. You see things much more clearly.”
Burr, the chairman of the Senate Intelligence Committee, on Friday called for a Senate Ethics Committee investigation into his trades amid an uproar over reports that he had sought to safeguard his portfolio against the looming pandemic even as he assured the public all was well. Burr, who had been present for a classified briefing on the outbreak in late January, wrote an op-ed declaring the U.S. “better prepared than ever before” to face down the virus on Feb. 7 — six days before unloading at least $628,000 of his own stock as the market was peaking.
The North Carolina Republican is one of several senators, including Loeffler, Sen. Dianne Feinstein (D-Calif.), Sen. James Inhofe (R.-Okla.) and Sen. David Perdue (R-Ga.), who sold stock in late January and early February as the Senate was ramping up coronavirus briefings.
It’s illegal for lawmakers and aides to trade stocks based on private information. But they are allowed to buy and sell shares based on public information they absorb on Capitol Hill so long as they disclose those trades within 30 days. That permissive approach to buying and selling stocks — the executive branch has much stricter rules — has drawn criticism from watchdogs who argue the freedom to trade isn’t as important as the need for the public to trust Congress to act only on its behalf.
Davis, the 10-term California Democrat who is a member of the House Armed Services and Education and Labor Committees, unloaded stock on Feb. 11 in the airline and cruise industries, two sectors that have since been ground to a halt by the pandemic nearly two weeks before the market tanked. Davis’ spokesman said she has a “third party handling her portfolio and does not play a role in the purchase or sale of her stocks.”
Other members stand to make money off companies working to combat the disease. Rep. Rob Wittman (R-Va.) purchased between $1,001 and $15,000 of stock in the pharmaceutical company AbbVie Inc., on Feb. 27, the day the company released a statement saying it had donated one of its antiviral drugs to China as an experimental option for treating the coronavirus and that it was exploring a research collaboration on potential treatment options.
Wittman’s office said he “does not have any involvement in investment decisions for his financial portfolio” and noted that AbbVie shares have since lost value.
Still others were able to move their money to safe havens ahead of the general public. On Jan. 29, the day he and others were briefed on the coronavirus, Rep. Scott Peters (D-Calif.) sold between $500,001 and $1 million in Butte-Glenn municipal bonds. He and his wife moved over $2 million from local government bonds to U.S. Treasury notes, considered a port in the storm amid market turbulence, between Jan. 27 and Jan. 29. The muni bond market is currently facing strong headwinds.
Peters’ office said he and his wife “sold one set of government bonds and bought other government bonds” and said the suggestion that it was linked to the virus briefing is “out of bounds.”
Aides, who sometimes spend years working alongside their bosses on Capitol Hill and can play as much a role in shaping the response to a crisis as their bosses, also bought and sold stocks in January and February.
Scott Sloofman, a top communications aide in Senate Majority Leader Mitch McConnell’s office, purchased stock in a company that could wind up being instrumental in the fight against the coronavirus in late January: Moderna, Inc., which is now testing the first vaccine for the disease in Washington state.
Sloofman purchased the stock on Jan. 28, one week after Moderna, Inc. announced it was collaborating with the federal government to develop the vaccine. The company’s stock rose in the days since, at some points more than 20 percent.
The purchase was listed as between $1,001 and $15,000 in value. A Senate aide familiar with the trade said Sloofman purchased just under $1,400 in stock. He bought the stock two weeks after seeing a CNBC segment featuring Moderna’s CEO discussing plans to develop new medications on Jan. 15, the aide said, and Sloofman does not focus on health care or national security policymaking for his job.
Sarah Holmes, New Hampshire-based state director to New Hampshire Sen. Jeanne Shaheen and a longtime aide to the senator, sold between $1,001 and $15,000 worth of stock in Delta Airlines on Jan. 24, as lawmakers were beginning to be clued into the forthcoming crisis.
Holmes traded out two stocks a week later, on Jan. 29, then on Feb. 27 made two purchases that could prove advantageous in the weeks ahead: Holmes purchased between $15,001 and $50,000 of stock in each of two more companies, the pharmaceutical company Gilead, Inc. — which makes remdesivir, a drug that is currently being tested to treat coronavirus — and wipe manufacturer Clorox.
The trades were made in a joint account, Shaheen spokesman Ryan Nickel said, and “were made at the complete discretion of her broker with no input from Sarah or her husband.”
Additionally, the sale of the Delta stock on Jan. 24 was made prior to the classified Jan. 24 briefing for senators, Nickel said, at 9:30 a.m., and “neither Senator Shaheen nor any of her staff were present for the classified briefing on Jan. 24.” Holmes does not have a security clearance and has complied with disclosure requirements, Nickel added.
Though there is no current evidence that any of these elected officials or aides violated the law, there are several different bodies that could investigate lawmakers and aides for trading stocks. In addition to the ethics committees on Capitol Hill, the Department of Justice and the Securities and Exchange Commission have the authority to launch probes of their own.
Burr and other lawmakers’ trades may be enough to spur a probe from the federal government, said Kevin Muhlendorf, a former investigator at the Department of Justice and SEC.
“My gut on this is that based on the trading and the publicity, it’s highly likely that there will be some investigations by DOJ. I don’t think the political nature of this is going to stop that,” said Muhlendorf. “It’s going to come down to very fact-specific inquiries: What were the sources of information? What was the timing of the trades? Those are going to all have to be scrutinized closely and thoroughly.”