While millions of Americans already have lost roughly one-third of their savings in the stock market due to the coronavirus, some lawmakers with inside information have protected themselves and now are poised to cash in when this finally is over.
Not only have health care systems around the globe been challenged like never before, but dozens of other cultural institutions from education to religion have had to adapt in unprecedented ways to the pandemic. Financial markets are among the most obvious casualties.
Here in the United States, words like “plunge” and “plummet” are inadequate to describe what has occurred on the New York Stock Exchange (NYSE). From the Dow Jones Industrial Average historic high of 29,551.42 set on February 12, 2020, the market closed on March 20 at 19,173.98.
That, stated CNBC News, is a 35.2% loss of value in five weeks.
Something Rotten?
During such times, wouldn’t it be nice to have had some warning in advance so you could dump your stock, protect your wealth, and then multiply your stake by buying back at bargain rates?
Is it possible that U.S. senators would do such a thing?
Republican Senators Richard Burr (NC), Kelly Loeffler (GA), and Jim Imhofe (OK) have been accused of taking advantage of inside information to which they were privy as senators. So has California Democrat Dianne Feinstein.
The Washington Post reported that Burr, head of the Intelligence Committee, and thus privy to reports on the virus, allegedly sold upwards of $1.7 million worth of stock soon before the market fell. The Post added, “He also sits on the Senate Health, Education, Labor and Pensions Committee, which received briefings on the pandemic.”
Loeffler’s gains were allegedly between $1.28 million and $3.1 million. She too was in a privileged position to sell before the crash.
According to the New York Post, Feinstein sold $500,001 to $1 million worth of stock in Allogene Therapeutics on Jan. 31, less than a month before the coronavirus sent the markets into the toilet. Her husband sold $1,000,001 to $5 million worth of Allogene shares on Feb. 18, according to financial disclosures, the Post reported.
A spokesman for Feinstein said her assets are in a blind trust and that she has no involvement in her husband’s financial decisions.
Meanwhile, the Post reported that Inhofe dumped as much as $400,000 worth of stock on Jan. 27, selling shares in five different companies, including Apple, PayPal and Brookfield Asset Management, according to his financial statement.
He said his financial advisor has been selling his stocks and moving the proceeds to mutual funds at his request, “to avoid any appearance of controversy.” Further, he said he was not “aware of or consulted about any transactions.”
Outrage
With an investigation into their transactions underway, Burr and Loeffler also have attributed their respective sales to portfolio managers/advisors who apparently invest their fortunes without first consulting them—in Loeffler’s case, a claim the more doubtful since her husband is Chair of the New York Stock Exchange.
Tiana Lowe, a columnist for the conservative Washington Examiner, wrote a piece accusing them at the very least of “acting idiotically,” and said “if they can't [show financial receipts] soon, they ought to resign—not just from the Senate but permanently from any hopes of public office.”
Loeffler denounced this “dishonest narrative” and “ridiculous and baseless attack” in a series of tweets. “I have no knowledge of these trades until well after they are made,” went one.
Burr’s eight tweets appeared more diversionary than not, blaming National Public Radio for misrepresenting a speech in late February in which he warned Americans about the approaching threat, but neglecting to address his sell-offs.
On March 20, Tucker Carlson of Fox News insisted Sen. Burr explain his actions or resign.
The Bottom Line
Tens of millions of Americans have seen the value of their retirement accounts and investments cut by one-third in the blink of an eye while a handful of senators are positioned to make a killing as a result of the same crisis. We, the people, trust our elected officials to devote themselves to healing the Republic in a time of dire need, not to enrich themselves as we watch our own life savings vanish.
Hopefully, ethics investigations will be held to look into these transactions, and these senators will be held accountable if the insider trading suspicions are proven to be true.
Nevertheless, it is hard to feel anything but outrage at what seems like out-and-out betrayal by those in high office.