DOJ Launches Investigation into Lawmakers Selling Stock Before Coronavirus Crash
Federal law enforcement investigating allegations of insider trading before market crashed
The Department of Justice is reportedly investigating allegations that several lawmakers used insider knowledge of the coronavirus crisis's impact on the economy to sell off millions in stock before the markets crashed.
Federal law enforcement officials have already launched an investigation into a series of stock market transactions that were made by U.S. lawmakers.
Prior to the stock market tanking as a result of COVID-19 rapidly spreading throughout the United States, several senators dumped their investments.
At least four lawmakers are known to have sold-off millions in personal stock holdings after being secretly briefed about the economic impact of the Chinese virus, but before the public was made aware.
While the dumping may not have profited them, it would have saved them from suffering massive personal losses.
Sen. Richard Burr (R-NC) has reportedly already been questioned by the FBI regarding his transactions.
“The inquiry, which is still in its early stages and being done in coordination with the Securities and Exchange Commission, has so far included outreach from the FBI to at least one lawmaker, Sen. Richard Burr, seeking information about the trades, according to one of the sources,” CNN reported.
“Public scrutiny of the lawmakers’ market activity has centered on whether members of Congress sought to profit from the information they obtained in non-public briefings about the virus epidemic.”
CNN adds there is “no indication that any of the sales, including Burr’s, broke any laws or ran afoul of Senate rules.”
Other senators who have come under scrutiny over their trading activity include Sens. Kelly Loeffler (R-GA), Dianne Feinstein (D-CA), and Jim Inhofe (R-OK).
“Congress passed the Stock Act in 2012, which made it illegal for lawmakers to use inside information for financial benefit,” CNN adds.
“Under insider trading laws, prosecutors would need to prove the lawmakers traded based on material non-public information they received in violation of a duty to keep it confidential.”
In a statement two weeks ago, Burr said he welcomed an investigation into his stock market transactions.
“I relied solely on public news reports to guide my decision regarding the sale of stocks on February 13,” Burr said in a statement.
“Specifically, I closely followed CNBC’s daily health and science reporting out of its Asia bureaus at the time.”
Burr continued, “Understanding the assumption many could make in hindsight, however, I spoke this morning with the chairman of the Senate Ethics Committee and asked him to open a complete review of the matter with full transparency.”
Loeffler appeared in numerous television interviews after speculation over her stock trades where she said that she does not manage her portfolio.
Loeffler told Fox Business host Neil Cavuto on March 24, “I don’t do trades, Neil.
"I’m not involved in my portfolio. My husband is not involved.
"Our portfolio is managed by third parties.
"The actions are blind to me until they put it in front of me at the end of the reporting period.
"And I will just tell you, in that portfolio, it’s absolutely false that we sold millions.
"Actually, it was a more bullish bet.
"We ended up owning companies like Delta, like Goldman Sachs, like Prudential, companies that have been hard-hit and ended up losing money.
"No one has reported that and it doesn’t, you know, it has nothing to do with knowledge I had or didn’t have because I had no involvement in these trades.”
CNN noted that Feinstein did not sell any stock herself, but her husband reportedly sold millions in stocks.
Inhofe said that he had no involvement in the investment decisions that were made in his portfolio.
When the news broke about the senator’s stock trades it spurred widespread calls for them to resign or for the government to launch an investigation.