Justice Department launches inquiry of senators who sold large chunks of stock ahead of coronavirus market slide

Justice Department launches inquiry of senators who sold large chunks of stock ahead of coronavirus market slide

Federal authorities are reviewing the stock sales of four lawmakers just prior to the recent market slide triggered by the deadly coronavirus outbreak, a person familiar with the matter said Monday.

Recent financial disclosure statements indicated that Sens. Richard Burr, R-N.C.; Jim Inhofe, R-Okla.; Kelly Loeffler, R-Ga.; and Dianne Feinstein, D-Calif.; their spouses or advisers sold large chunks of stock around the time lawmakers were receiving behind-the-scenes briefings about the severity of the coronavirus, which has now claimed more than 2,800 lives in the U.S. alone.

The senators have denied any wrongdoing, and Burr has asked the Senate Ethics Committee to review his transactions involving up to $1.6 million. The federal inquiry, which was described as in its early stages, was first reported by CNN.

A Justice Department spokeswoman declined to comment Monday

What we know: Senators sold stocks before coronavirus sank the markets

GOP Senator from North Carolina Richard Burr attends the Farewell Ceremony for Deputy Attorney General Rod Rosenstein at the Department Justice in Washington, D.C, May 9, 2019. Burr is chairman of the Senate Intelligence Committee, which subpoenaed Donald Trump Jr., the son of President Donald J. Trump.

Burr and his wife sold the stocks in February, according to disclosure statements. Lawmakers are not required to disclose exact transaction values and instead report ranges for the transaction whenever it exceeds $1,000.

The North Carolina senator, chairman of the Intelligence Committee, has asserted that he made the trades based on news reports about COVID-19, not on private information that flowed from government briefings.

"The law is clear that any American – including a senator – may participate in the stock market based on public information, as Sen. Burr did," Burr's attorney, Alice Fisher, said Monday. "When this issue arose, Sen. Burr immediately asked the Senate Ethics Committee to conduct a complete review, and he will cooperate with that review as well as any other appropriate inquiry. Sen. Burr welcomes a thorough review of the facts in this matter, which will establish that his actions were appropriate.”

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According to disclosure statements, Loeffler and her husband, New York Stock Exchange Chairman Jeffrey Sprecher, sold between $1 million and $2.49 million in February, according to disclosure statements.

Inhofe sold between sold between $50,000 and $100,000 in stock Feb. 20, while Feinstein's disclosure report shows sales of between $1 million and $5 million in stocks.

Loeffler, Inhofe and Feinstein have said that their financial transactions were handled by third-party advisers, or in Feinstein's case, as part of blind trust and that they made no personal decisions on the moves.

Senators sold stock before market crash

The 2012 Stock Act specifically prevents members of Congress from trading stocks based on non-public information they learn as part of their duties as lawmakers. Burr was one of three senators who voted against the law.

The Securities and Exchange Commission, in a statement last week, issued a new warning against the use of insider information, highlighting "the importance of maintaining market integrity.

"Those with such access – directors, officers, employees, and consultants and other outside professionals – should be mindful of their obligations to keep this information confidential and to comply with the prohibitions on illegal securities trading," the SEC Enforcement Division stated. "Trading in a company’s securities on the basis of inside information may violate the anti-fraud provisions of the federal securities laws."

The statement made no reference to the accounts of the lawmakers' trades.

Burr has drawn strong rebukes from colleagues, including one of President Donald Trump’s fiercest allies in Congress, Rep. Matt Gaetz, R-Fla., who called for the senator's removal as Intelligence Committee chairman.

Gaetz tweeted Monday that Burr should no longer hold the sensitive post, where he has been privy to closed-door briefings about the unfolding crisis.

“How can @senatemajldr justify leaving someone as the Chairman of the Intelligence Committee … who is being investigated by the FBI for criminally abusing their position for personal, financial gain?!?!,” Gaetz tweeted at Senate Majority Leader Mitch McConnell, R-Ky., “#wheresmitch. Republicans need to do a better job cleaning our own house.”

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Source: https://www.usatoday.com/story/news/politics/2020/03/30/coronavirus-stock-sales-senators-burr-inhofe-loeffler-feinstein/5086707002/

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