| Part ofCOVID-19 pandemic in the United States,2020 stock market crash | |
 US Capitol building, home of the US Congress. | |
| Date | February, 2020 - January 19, 2021 |
|---|---|
| Location | United States Congress |
| Cause | Participants' insider information ofCOVID-19 pandemic |
| Participants | MultipleUnited States Senators, notably,Richard Burr,Kelly Loeffler,Jim Inhofe,Dianne Feinstein,David Perdue,John Hoeven |
| Outcome | Millions of dollars of stock sold and purchased at the start of theCOVID-19 pandemic |
| Inquiries | No charges brought against participants and all investigations into senators closed |
The2020 congressional insider trading scandal was apolitical scandal in the United States involving allegations that several members of theUnited States Senate violated theSTOCK Act by selling stock at the start of theCOVID-19 pandemic in the United States and just before astock market crash on February 20, 2020, using knowledge given to them at a closed Senate meeting. TheDepartment of Justice (DOJ) initiated a probe into the stock transactions on March 30, 2020. No charges were brought against anyone and all investigations into the matter are closed.
On January 26, 2012, SenatorJoe Lieberman introduced theSTOCK Act that would prohibit the use of non-public information for private profit, including insider trading by members of Congress and other government employees. The bill was passed by the Senate with only SenatorsRichard Burr,Jeff Bingaman, andTom Coburn voting against it. The House of Representatives voted to approve of the bill and it was signed into law by PresidentBarack Obama on April 4, 2012.[1]
On January 24, 2020, the Senate Committees onHealth andForeign Relations held a closed meeting with only Senators present to brief them about theCOVID-19 outbreak and how it would affect the United States.[2][3] Following the meeting SenatorKelly Loeffler and her husbandJeffrey Sprecher, the chairman of theNew York Stock Exchange, made twenty-seven transactions to sell stock worth between $1,275,000 and $3,100,000 and two transactions to buy stock inCitrix Systems which saw an increase following thecorrection.[2] SenatorDavid Perdue made a series of 112 transactions with stocks sold for around $825,000 and bought stocks worth $1.8 million. Perdue started buying around $185,000 in stock inDuPont, a company that makespersonal protective equipment, on the same day as the Senate briefing up to March 2.[4][5] Additionally,John Hoeven ofNorth Dakota purchased $250,000 in health science companies in January, five days after attending a briefing about the pandemic.[6]
On January 31 and February 18,Dianne Feinstein sold stock inAllogene Therapeutics, with the estimated value to be between $1.5 million and $6 million.[7] According to Feinstein, the investment decisions are made by her husband, and are reported by her per Senate rules. She states that “this company is unrelated to any work on the coronavirus and the sale was unrelated to the situation.”[8] Feinstein also reportedly provided documents to the FBI related to her husband's transactions, in order to show that she had no connection to the decision.[9]
On February 7, Senator Burr, the Chair of theSenate Intelligence Committee, stated in an open-editorial on how the government could respond to coronavirus that "Luckily, we have a framework in place that has put us in a better position than any other country to respond to a public health threat, like the coronavirus," However, on February 13, he and his wife sold between $628,000 and $1.7 million worth of stock through thirty-three transactions and on February 27, Burr stated that "There's one thing that I can tell you about this: It is much more aggressive in its transmission than anything that we have seen in recent history," at aCapitol Hill Club luncheon and his statement was later leaked in a secret recording.[10][11]
On March 19,ProPublica published an article showing that Burr had sold stock shortly before the correction and Kelly Loeffler,Jim Inhofe, and Dianne Feinstein's stock selling was also reported.NPR asked Caitlin Carroll, Burr's spokesperson, for a comment on the alleged violations and she responded with "lol" and then clarified that "As the situation continues to evolve daily, he has been deeply concerned by the steep and sudden toll this pandemic is taking on our economy."[10]
Tucker Carlson called for Burr to resign from the Senate and be prosecuted for insider trading on a segment ofTucker Carlson Tonight.[12] RepresentativeAlexandria Ocasio-Cortez also called for Burr to resign and RepresentativeJoaquin Castro called for an investigation into the stock selling.[13] RepresentativeDoug Collins, who ran against Loeffler in thespecial Senate election in Georgia, criticized her by stating "People are losing their jobs, their businesses, their retirements, and even their lives and Kelly Loeffler is profiting off their pain? I'm sickened just thinking about it."[14]
On April 10, Montana Attorney GeneralTim Fox accused RepresentativeGreg Gianforte, thewealthiest member of the House of Representatives, of insider trading by investing into the manufacturer ofhydroxychloroquine. At the time Fox was running against Gianforte for the Republican nomination in the2020 Montana gubernatorial election.[15] Although several investments were made in Gianforte's name for companies which potentially stood to profit from the COVID-19 pandemic, such asRoche Holdings, Gianforte says all his investments are made for him through a blind trust.[16]
On March 20, Burr requested for theSenate Ethics Committee to investigate his stock trading history and stated that he only used publicly available information to make his decisions.[17] On March 30, the Department of Justice initiated a probe into the stock transactions in conjunction with theSecurities and Exchange Commission (SEC).[18]
During the investigation it was discovered that Burr had also sold around $47,000 worth of stock in OCI, a Dutch fertilizer company, before it suffered a forty-two percent decrease in its value in 2018. From September 5 to 8, 2018, Burr and his wife sold all of their stock in OCI, which at the time was experiencing its highest share price; a month later it failed to meet quarterly earnings expectations after the Trump administration granted exemptions to eight countries for sanctions placed on Iranian oil and petrochemicals.[19]
On May 13, the FBI seized Burr's phone, to investigate his communications with his stock broker, among other warrants, including one to search his personaliCloud account.[20] On May 14, Burr told Senate Majority LeaderMitch McConnell that he would temporarily step down as chairman of the Senate Intelligence Committee for the remainder of the investigation.[21]
On May 26, the Justice Department announced that it had ended its investigation into Feinstein, Inhofe, and Loeffler.[22] On January 19, 2021, the Justice Department closed its investigation into Burr.[23]
.svg)