The two Republican incumbents locked in heated runoff battles for Georgia’s two Senate seats — and control of the US Senate — also happen to be among that body’s top stock traders.
Yet David Perdue and Kelly Loeffler are hardly alone among their colleagues in being able to make a buck off their enormous portfolios. What’s alarming is that some have done so in curiously well-timed trades that have tracked with closed-door briefings, even those involving the deadly pandemic.
Anytime a lawmaker plays the stock market, the potential for insider trading and conflicts of interest is sky high. Not only do members of Congress get access to sensitive government information, but their votes on legislation can also have a direct impact on stock prices.
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Senator Richard Burr, Republican of North Carolina, is currently under federal investigation for selling off as much as $1.7 million in stock on Feb. 13, even as head of the Intelligence Committee he was getting daily briefings on the growing danger of a pandemic that President Trump at the time was downplaying in public. Burr has since stepped down as chair of that committee.
But insider trading, explicitly prohibited for members of Congress under the 2012 STOCK (Stop Trading on Congressional Knowledge) Act, is exceedingly difficult to prove. It requires establishing that the member relied on privileged information to buy or sell stocks and profit, not just that there was a coincidence of having knowledge and making a trade. Similar federal probes involving post-coronavirus-briefing trades by Loeffler, Republican Senator James Inhofe of Oklahoma, and Democrat Dianne Feinstein of California were closed by the Justice Department. Feinstein said the trades in question were her husband’s. Inhofe said his were in a blind trust.
Loeffler’s trades of between $1,275,000 and $3.1 million (congressional financial disclosures require only a range) occurred on the same day as a private briefing to Congress by the nation’s chief epidemiologist, Dr. Anthony Fauci. Loeffler said her stock sales were made in conjunction with her husband, the chairman of the New York Stock Exchange.
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Because of the high bar to prove malfeasance, the only real solution is to ban stock trades altogether for sitting members of Congress, and that’s exactly what Massachusetts Senator Elizabeth Warren is proposing. It’s just one aspect of her wide-ranging anti-corruption act, which she refiled on Dec.18 with Democratic Representative Pramila Jayapal of Washington.
“After nearly four years of the most corrupt president in American history and with US senators brazenly trading stocks to profit off a raging pandemic, the Anti-Corruption and Public Integrity Act is more urgent than ever in order to rein in corruption, strengthen ethics, end lobbying as we know it, improve the integrity of our judiciary, reform campaign finance laws and finally ensure that we put people over profits and communities over corporations,” the two said in a joint statement.
An earlier version of the bill was a key part of Warren’s presidential bid. However, recent disclosures about some members of the Senate make the stock trade ban particularly critical as one small but incremental way to restore trust in government.
Perdue, for example, in an analysis done by The New York Times, was revealed to be the Senate’s most prolific stock trader, having executed 2,596 trades, mostly of stocks but also of bonds and funds, during his six-year term in office. He has already been investigated by the Justice Department for insider trading for a $1 million trade of stock in Cardlytics, a financial analysis firm, but the department declined to bring charges. Perdue is a member of the Banking, Housing, and Urban Development Committee.
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Perdue, who has often traded in Pfizer stock, purchased up to $260,000 worth of the stock between Feb. 26 and Feb. 28. On Feb. 28, his office issued a press release noting that he and Loeffler “attended regular congressional briefings led by the Coronavirus Task Force.” Pfizer announced its partnership with BioNTech to work on a coronavirus vaccine in March.
Senator Jeff Merkley, an Oregon Democrat, has introduced the Ban Conflicted Trading Act, a more modest proposal than Warren’s and one directly focused on stock trades. It would give members of Congress six months after their first election to divest or reinvest in funds but would prohibit the buying or selling of individual stocks thereafter. It would also prohibit members of Congress from serving on for-profit boards.
There is no shortage of good ideas — yes, even on Capitol Hill — to restore integrity to the political process. Warren’s idea to expand “an independent and empowered congressional ethics office insulated from congressional politics” would make a good companion effort to Merkley’s bill.
Warren is spot on about one thing — the need to restore integrity to government is indeed “more urgent than ever.” Having Congress clean up its own act would be a good place to start that effort.
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Editorials represent the views of the Boston Globe Editorial Board. Follow us on Twitter at @GlobeOpinion.
