Sen. Richard Burr, R-N.C., the chairman of the Senate Intelligence Committee, said on Friday that he did not act on any nonpublic information when he sold stocks last month, before the markets tanked because of the coronavirus.
Burr, the chairman of the Senate Intelligence Committee, sold off between $628,000 and $1.72 million of his holdings on February 13, ProPublica found. Some of his largest transactions involved shares of hotel chains that would lose between one-half and two-thirds of their value in the economic turbulence weeks later.
Burr said he relied on news reports, not on classified briefings he received about the spread of the virus overseas. But the timing of his trades may be proven to have occurred prior to any news reports.
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.
Loeffler, who sits on the Senate committee with oversight of the health care industry, unloaded between $1,275,000 and $3,100,000 in stocks jointly owned with her husband, the chairman of the New York Stock Exchange, from late-January to mid-February. The Committee on Health, Education, Labor and Pensions hosted a coronavirus briefing, with top administration officials, for the entire membership of the Senate on the same day that Loeffler’s portfolio began these trades,
Federal law has long banned insider trading, making it illegal for an employee of a business to buy or sell stock based on proprietary information. The provision is intended to prevent people in a company from having an advantage over outsiders.
That clearly wouldn’t apply to members of Congress, since they aren’t company insiders. But court rulings and regulations imposed over decades have made the reach of the law broader. In the language of the Securities and Exchange Commission, it’s a violation to trade stock based on “material, nonpublic information obtained as part of a relationship of trust or confidence.”
Congress appeared to apply that concept to itself when it passed the Stock Act in 2012. It amended securities law to say that all senators and representatives owe a duty of trust and confidence to the nation with respect to material, nonpublic information they obtain in the course of their official duties. That expanded on existing ethics rules that forbid members of Congress to use information they gain as part of their official duties in order to make a private profit.
Lamar Smith, a Texas Republican in the House at the time, praised the legislation saying, “The American people deserve to know that no one in any branch of government can profit from their office.” Congress acted after a wave of news reports documented stock sales by House and Senate members based on information they learned of in their committees.
Not only are the senators far wealthier than most of their constituents, but they’re in a prime position to increase their wealth via policymaking.
It’s not illegal for members of Congress to have personal financial stakes in the industries on which they legislate. But such investments raise questions about lawmakers’ motivations. If a representative on the House financial services committee owns hundreds of thousands of dollars worth of stock in Bank of America, how might this investment affect their questioning of Bank of America’s CEO in a hearing? Could it influence how they legislate and vote on banking issues?
While some members of Congress do try to limit possible conflicts of interest others claim their personal finances could never influence their conduct as elected representatives of the people, or fail to acknowledge concerns about their finances.
Ten members of the Senate banking committee own a total of as much as $8 million worth of stock in companies in the finance, securities, and real estate sector.
Senator Richard Shelby, a Republican from Alabama and member of the Senate banking, housing and urban affairs committee, owns between $1m and $5m worth of stock in private real estate insurance firm Tuscaloosa Title Company. Shelby sits on the housing, transportation and community development subcommittee, which has jurisdiction over the US Department of Housing and Urban Development, affordable housing, foreclosure mitigation and other housing matters, and the securities, insurance and investment subcommittee, which oversees the insurance industry. Shelby has been in the senate for 34 years.
Keep in mind that a U.S. Senator’s annual pay is $174,000. Where did these millions that they have acquired come from?
Senator Shelley Moore Capito, Republican from West Virginia and a member of the commerce, science, and transportation committee’s subcommittee on communications, technology, innovation and the internet and the subcommittee on manufacturing, trade and consumer protection, owns between $53,000 and $194,000 worth of Microsoft stock, as much as $99,000 of Intel stock and up to $30,000 each in AT&T and Verizon stock. She is also the daughter of three-term West Virginia governor Arch Alfred Moore Jr. The family’s power runs deep.
Calls are mounting for an investigation into Republican Senators Richard Burr and Kelly Loeffler for potential violations of the 2012 STOCK Act—a law Burr voted against when it cleared the Senate eight years ago.
Drain the swamp. Remember that phrase? Seems like the swamp has not been drained and now it is overflowing.