In March 2020, multiple news sources reported that two US senators, Richard Burr and Kelly Loeffler, had sold stocks weeks before the severity of the COVID-19 epidemic was publicly revealed to the American people.
Both senators are currently rebuffing calls to resign for what many believe is a case of insider trading that saw Burr and Loeffler privy, as US Senators serving on important committees, to insider knowledge of what lay ahead for the country. The allegation is that Burr and Loeffler sold shares of stocks they held prior to the stock market crashing because they were aware that a market collapse was imminent.
At the time of those initial reports, other senators were also accused of unloading stocks prior to an impending COVID-19 related economic crash. Further investigation indicated that those sell offs were not as suspicious as those of Burr and Loeffler. However, the reports served to re-open a debate about whether officials in the US government should be allowed to own stocks at all.
Senators sell their stocks
On March 19, as the coronavirus pandemic was intensifying and the number of COVID-19 related deaths in the US was still below 200, multiple reports appeared that looked bad for North Carolina Senator Richard Burr. More senators were also implicated in the reports, though the most serious involved Georgia Senator Kelly Loeffler.
First, NPR reported on secret recordings of remarks Burr made regarding the COVID-19 crisis to “well-connected constituents.” On February 27, the Republican senator warned those who were at a luncheon with him that the virus “is much more aggressive in its transmission than anything that we have seen in recent history. It is probably more akin to the 1918 [Spanish Flu] pandemic.”
But on the same February day, President Donald Trump publicly said about the virus, “It’s going to disappear. One day it’s like a miracle, it will disappear.” It appeared Trump was downplaying the severity of the virus while his administration was facing criticism for its response.
Presumably, as the chairman of the Senate Intelligence Committee, Burr had access to the same information about the virus as the president would have had.
Burr called the NPR report “a tabloid-style hit piece” in a Twitter thread on March 19, claiming the lunch at which the recording was made was a “publicly advertised and widely attended” event. He challenged the assertion that those in attendance were solely high-dollar donors. He also disputed the claim that Trump and administration officials were downplaying the severity of COVID-19 at the time.
However, on the same day the NPR report was published, multiple outlets reported that Burr, along with his wife, had sold 33 stocks in various companies, including hotels. These stocks were worth between US$628,000 and US$1.7 million. Those sales occurred on February 13, after a January briefing senators had received on potential coronavirus risks.
The initial reports also listed Senators Loeffler, James Inhofe (of Oklahoma) and Dianne Feinstein (of California) as having sold substantial amounts of stocks in the days and weeks after the briefing.
By the end of February, the stock market was in free fall over fears of the pandemic, suffering the worst weekly losses since the 2008 Great Recession. The timing of the sell offs suggested to many critics that the senators had used their advanced knowledge about an impending crisis to net a profit before the crash.
Senators accused of profiteering
Of the senators accused of profiting off of the COVID crisis, all were Republicans except for Feinstein, a Democrat. Weeks since the initial stories broke, though, all but Burr and Loeffler have generally been let off the hook.
As explained in a Twitter thread by Daily Beast reporter Lachlan Markay, the sell offs made by Inhofe, Feinstein and other senators were less questionable than those of Burr and Loeffler.
For instance, on February 18, Feinstein sold somewhere between US$1 million and US$5 million in stock in Allogene, a biopharma company. However, those stocks were sold when they were already at a low, which suggests that Feinstein did not attempt to profit prior to a market crash.
Likewise, Inhofe sold off stocks on January 27. As Markay explained, though, “Inhofe was also selling stock in the days *before* that coronavirus briefing.”
Both liberal and conservative critics have demanded that Burr and Loeffler resign or be investigated for their stock sell offs. So far, neither senator has indicated they will resign. Burr had already said he would not run for re-election in 2022, when his current term is up. As for Loeffler, she faces a special election this November.
Regardless of whether or not the selling of stocks was motivated by insider knowledge of an impending crisis, there have been calls for members of Congress to be barred from owning stock. Critics cite the risk of conflicts, where senators will legislate for their own financial gain instead of for the good of the country.
It was for those reasons that, in 2018, Senator Elizabeth Warren proposed a bill that would ban stock ownership for members of congress, federal judges and other high-level government figures. However, Warren’s bill was not passed into law.
Who is Richard Burr?
Burr, who was born in Virginia and raised in North Carolina, has been in Congress since winning a seat in the US House of Representatives in 1994. He served five two-year terms in the House before winning the former Senate seat of John Edwards, a Democrat who left his seat to run for an unsuccessful presidential bid, in 2004.
Prior to entering politics, Burr was a salesman and sales manager for Carswell Distributing Inc., a wholesale distributor. Burr says he entered politics in the 90s because the raising of taxes angered him.
Burr has distinguished himself as a conservative senator who has voted in alignment with President Trump’s agenda more than 92% of the time.
He is married to Brooke Burr, a real estate agent, with whom he has two sons.
Who is Kelly Loeffler?
Loeffler is the newest member of the US Senate, having been temporarily appointed by Georgia Governor Brian Kemp to replace the outgoing Senator Johnny Isakson. She only took her seat earlier this year and will face an immediate challenge this November in a special election.
Loeffler grew up in rural Illinois and attended the University of Illinois at Urbana-Champaign for her undergraduate degree before getting an MBA from DePaul University. She has worked in asset management for Citibank, William Blair, and the Crossroads Group, a private equity firm based in Dallas.
In 2002, she joined Intercontinental Exchange Inc. (ICE) as their chief communications and marketing officer and head of investor relations. Loeffler is married to Jeffrey Sprecher, the CEO of ICE, which owns the New York Stock Exchange. Due to their close involvement in the stock market, their financial moves in February have come under even greater scrutiny.
Since 2011, Loeffler has been a co-owner of the Atlanta Dream, a team in the Women’s National Basketball Association (WNBA).
Upon taking the Senate seat, the Atlanta Journal-Constitution called Loeffler a “political novice with deep pockets. Despite labeling herself a “lifelong conservative” and a “devout Christian” who is “strongly pro-life,” positions that play to her advantage in deeply conservative Georgia, her odds of winning re-election are said to be at risk.As NPR reports, even before the stock scandal, Loeffler did not have Trump’s support. The president had made public that he wanted Doug Collins, a current member of the House, to be appointed to her Senate seat. Still, in her relatively short time in the Senate, Loeffler has voted in alignment with Trump’s agenda 100% of the time.