Ire rises over senators' pre-crisis stock sales

Georgia U.S. Sens. Kelly Loeffler and David Perdue chat Friday after arriving on Capitol Hill for a Republican policy luncheon.
(AP/Susan Walsh)
Georgia U.S. Sens. Kelly Loeffler and David Perdue chat Friday after arriving on Capitol Hill for a Republican policy luncheon. (AP/Susan Walsh)

WASHINGTON -- Facing public anger, senators in both political parties denied Friday that they exploited advance knowledge when they dumped stocks and other financial holdings before the coronavirus wreaked havoc on the economy.

Senate Intelligence Committee Chairman Richard Burr, R-N.C., whose sales of as much as $1.7 million in stocks have come under the most scrutiny, in a statement Friday requested an ethics review of his actions in the days before markets dropped in February. Burr and the other senators pushed back strongly against suggestions that they used sensitive government information to protect their financial well-being.

"Understanding the assumption many could make in hindsight however, I spoke this morning with the Chairman of the Senate Ethics Committee and asked him to open a complete review of the matter with full transparency," Burr said in a statement.

The actions by the handful of senators, whose stock transactions are documented in mandatory filings to the Senate, attracted scrutiny as the coronavirus pandemic continues to disrupt everyday life, wiping out jobs and personal wealth.

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"It appears that in a time of crisis, these senators chose instead to serve themselves, violating the public trust and abdicating their duty," said Noah Bookbinder, the director of the group Citizens for Responsibility and Ethics in Washington, which filed a Senate ethics complaint against Burr and Republican Sen. Kelly Loeffler of Georgia. "They must be immediately investigated."

Senate records show that Burr and his wife sold between roughly $600,000 and $1.7 million in more than 30 separate transactions in late January and mid-February, just before the market began to plummet and government health officials began to sound alarms about the virus.

The sales included stocks in some of the industries that were later hardest hit during the pandemic, including those in hotels and restaurants, shipping, drug manufacturing and health care, records show. In his statement, Burr said he had relied specifically on "CNBC's daily health and science reporting out of its Asia bureaus."

There is no indication that Burr, who does not plan to run for reelection in 2022, was acting on inside information. The intelligence panel he leads did not have any briefings on the pandemic the week when most of the stocks were sold, according to a person familiar with the matter. The person declined to be identified to discuss confidential committee activity.

Senators did receive a private briefing on the virus on Jan. 24, which was public knowledge. A separate briefing was held Feb. 12 by the Senate Health, Education, Labor and Pensions Committee, of which Burr is a member. It's unclear if he attended either session.

The stock sales were first reported by ProPublica and The Center for Responsive Politics. Most of them were on Feb. 13, just before Burr made a speech in Washington, D.C., in which he predicted severe consequences from the virus, according to audio obtained by National Public Radio and released Thursday.

Burr told the small North Carolina State Society audience that the virus was "much more aggressive in its transmission than anything that we have seen in recent history" and "probably more akin to the 1918 pandemic."

Burr's remarks were darker than what he was saying publicly.

In a tweet Thursday, Burr said Americans were already being warned about the effects of the virus when he made the speech to the North Carolina State Society.

Burr's North Carolina colleague, Republican Sen. Thom Tillis, said in a tweet Friday that "given the circumstances, Senator Burr owes North Carolinians an explanation" and that an ethics committee review could provide a "professional and bipartisan inquiry into this matter."

Asked at the Capitol about Burr's sales, Senate Majority Leader Mitch McConnell did not respond.

COMPLAINTS CALL

Burr was not the only lawmaker to sell off stocks before the market slide. Loeffler, a new senator up for reelection this year, sold hundreds of thousands of dollars worth of stock in late January and February, as senators began to get briefings on the virus, according to records. So did fellow Georgia Sen. David Perdue, another Republican lawmaker running for reelection, and Republican Sen. James Inhofe of Oklahoma and Democratic Sen. Dianne Feinstein of California.

Common Cause, an advocacy group, announced that it was filing complaints with the Justice Department and Securities and Exchange Commission against Burr, Loeffler, Inhofe and Feinstein.

Loeffler's sales were first reported by the Daily Beast. In a tweet early Friday morning, she called it a "ridiculous & baseless attack."

"Investment decisions are made by multiple third-party advisors without my or my husband's knowledge or involvement," she tweeted. She said she was informed of the decisions three weeks after they were made. Loeffler is married to Jeffrey Sprecher, the chairman and CEO of financial powerhouse Intercontinental Exchange.

Loeffler and her husband offloaded anywhere between about $1.1 million and $2.8 million in stock. But they plunged between $315,000 and $650,000 into real estate investment firm Blackstone, tech company Oracle and Citrix Systems -- a company that develops workplace and telecommuting software.

During an appearance Friday on CNBC, Loeffler said sales by her and Sprecher were made "at the decision of our investment managers."

"Certainly I had no involvement," Loeffler said, adding that she would welcome any scrutiny that is appropriate and has always adhered "to the letter and the spirit of the law."

Georgia Democrats quickly called on Loeffler to step down and accused her of profiteering from her position. And Republican allies of her top conservative adversary, U.S. Rep. Doug Collins, openly worried about the fallout of her stock sales.

House Speaker David Ralston, a longtime Collins friend, said in an interview Friday that he's heard from "upset" House candidates concerned that the Republican ticket will get tainted in November by Loeffler's financial dealings.

"I'm absolutely worried about the down-ticket damage," said Ralston. "A lot of people are going to associate these activities with some very fine candidates running for the Georgia House and are going to hold that against us."

At least one Republican candidate went a step further. Mark Gonsalves, a Republican candidate running for Georgia's 7th District, said "with a heavy heart" he was forced to call for Loeffler's resignation.

"Taking advantage of the coronavirus pandemic for personal financial gain is an alarming lack of judgment that renders her unfit to represent Georgia in the U.S. Senate," he said.

TRANSACTIONS SPECIFICS

Inhofe said he did not even attend a closed Senate briefing on coronavirus that could have helped inform stock decisions. He sold anywhere between roughly $395,000 and $850,000 worth of stock that he held in multiple companies in late January and early February, according to a disclosure.

Inhofe tweeted that he has no involvement in his investment decisions after asking his financial adviser to move him out of stocks and into mutual funds "to avoid any appearance of controversy." He said he made that move in December 2018, shortly after becoming chairman of the Senate Armed Services Committee.

Perdue sold off as much as $770,000 in stock in February.

In more than 40 separate transactions, he dropped a wide array of holdings, including as much as $165,000 in stock in the Nevada-based casino company that owns Caesars Palace in Las Vegas. The industry has been battered by the virus, which has led casinos to shut down. In the days after he sold the shares, the value of Caesars Entertainment Corp. stock cratered.

He also purchased shares in Disney and Delta, two companies hard hit by the pandemic.

Perdue attended a Feb. 25 Senate Armed Services committee meeting where spread of the coronavirus was discussed. In the days after, he invested as much as $260,000 in pharmaceutical company Pfizer, according to a disclosure.

Perdue spokeswoman Casey Black said the senator has an outside adviser manage his investments and "goes above and beyond to fully comply with the law."

Feinstein reported that her husband sold off between $1.5 million and $6 million worth of stock in Allogene Therapeutics more than a month ago. The San Francisco-based biotech company researches and develops cures for cancer.

Feinstein, who also sits on the intelligence panel, said in a statement that she didn't attend the Jan. 24 briefing and had no input in her husband's decisions.

"This company is unrelated to any work on the coronavirus, and the sale was unrelated to the situation," she said.

President Donald Trump, who has faced persistent questions about whether his family is profiting from his office, declined to say whether the sales should be investigated.

"I don't know because I'd have to look at it." He said of the senators: "I find them to be honorable people."

Insider trading prohibitions apply to all members of Congress, congressional staff members and other federal officials, under the Stop Trading on Congressional Knowledge [Stock] Act of 2012.

Information for this article was contributed by Mary Clare Jalonick, Brian Slodysko, Lisa Mascaro and Padmananda Rama of The Associated Press; by John Wagner, Michelle Ye Hee Lee, Jon Swaine, Karoun Demirjian, Mike DeBonis and Paul Kane of The Washington Post; and by Tia Mitchell and Greg Bluestein of The New York Times.

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Sen. Richard Burr, R-N.C., speaks with reporters on Capitol Hill, Tuesday, Feb. 4, 2020 in Washington. (AP Photo/Alex Brandon)

A Section on 03/21/2020

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