As has been discussed here previously, suspicions were raised when it was revealed that at least four members of the Senate had conducted stock trades after receiving private briefings about the novel coronavirus in the early days of the pandemic. Profiting from such information without letting the rest of the nation know first would obviously be morally indefensible and potentially illegal, falling under insider trading restrictions. The Department of Justice undertook investigations into trades made by (or on behalf of ) Kelly Loeffler (R-Georgia), Dianne Feinstein (D-California), James Inhofe (R-Oklahoma) and Richard Burr (R-North Carolina). Yesterday, probes into all but Burr were dropped by the DoJ. Senator Loeffler was among the first to respond to the news. (NBC News)
The Department of Justice has closed insider trading probes into three senators who sold off stocks after early briefings on the coronavirus, aides told NBC News.
A spokesman for Sen. Kelly Loeffler, R-Ga., confirmed she’d been informed that DOJ dropped a probe into her trades, and called the allegations “politically motivated.”
“Today’s clear exoneration by the Department of Justice affirms what Senator Loeffler has said all along — she did nothing wrong. This was a politically-motivated attack shamelessly promoted by the fake news media and her political opponents. Senator Loeffler will continue to focus her full attention on delivering results for Georgians,” said the spokesman, Stephen Lawson.
So in the cases of Loeffler, Feinstein and Inhofe, the Justice Department seems to be satisfied with their explanations for how the various trades took place. Not for nothing, however, but Senator Loeffler might want to back off the claims of shameless, politically motivated investigations. Each of the Senators’ financial disclosure records indicates that the transactions in question did take place. Some involved stocks while others related to mutual funds that included stocks that could be expected to be impacted by the news of a spreading pandemic. To expect such deals to not be looked into if only to avoid the appearance of impropriety is completely unreasonable. Clearly these transactions needed to be fully investigated.
For the three exonerated Senators, I suppose the public’s confidence in the outcome will rely entirely on how much faith you have in the honesty and integrity of both the members and their financial advisors. In the case of both Loeffler and Inhofe, they insist that they have no involvement in the investment decisions made by their brokers. Feinstein assures us that all of the trades were made by her husband and that she “has no involvement in any of her husband’s financial decisions.”
That seems to be good enough for the DoJ (or at least they couldn’t come up with any evidence to contradict the claims) so that about wraps things up. But in the case of Burr, he has admitted to personally directing the trades to be made, while insisting that those decisions were based “solely on public news reports to guide my decision regarding the sale of stocks on February 13.”
That might be a tougher sell in terms of the DoJ investigation. You’ll recall that the news about the novel coronavirus back in the first weeks of February was far different than the information that came out later. Both politicians and journalists were still frequently insisting that we shouldn’t overreact and that the new virus was probably not much worse than the flu. But at the same time, outlets like CNN International were reporting that it was actually deadlier than SARS. So proving that Burr didn’t base his trades on publicly available news would be a difficult task. Don’t be surprised if the investigation into him is similarly dropped in the near future unless they can produce some concrete evidence against him.
As I’ve said here in the past, even if we assume the absolute best about all of the Senators involved in this mess, we’re seeing yet another example of why members of Congress should just get entirely out of the market while they are in office. Put your money in T-bills or a savings account or something similar, because the optics are still awful. You know that there will still be Americans out there wondering if one of their elected officials didn’t step outside and place a call to their broker (or have a relative do it) after receiving a briefing. Others will scoff at the idea that Senator Feinstein wouldn’t casually drop some hints to her husband over dinner. And even if all of them are indeed as pure as the driven snow, why allow for even the appearance of impropriety in such politically divisive times when the public’s approval of Congress remains at nearly historic lows?