At least two Republican U.S. senators are facing media scrutiny and public criticism for having sold millions of dollars of stock after receiving confidential briefings about the coming coronavirus crisis and before that information became public and the stock market crashed.
Sen. Richard Burr (R-NC), the chairman of the Senate Intelligence Committee, which received confidential briefings, dumped an estimated $1.6 million of stock in mid-February. Burr claims he sold his stock because of information already made public in news reports. Presumably he’s not referring to a Fox op-ed he co-authored just a week prior, which reassured the public that things were under control, saying “the United States today is better prepared than ever before to face emerging public health threats, like the coronavirus.”
He wasn’t the only one who apparently took advantage of inside information to cash in ahead of the market panic. Sen. Kelly Loeffler (R-GA) also dumped millions of dollars worth of stock before the markets crashed. Unlike Burr, she isn’t a member of the Senate Intelligence Committee, so she didn’t sit in those classified briefings, although she might have been told about them. But more likely her source of inside information was her husband, who is president of the New York Stock Exchange.
In the U.S., insider trading is a federal crime. “Insider trading” consists of using information not known to the general public to profit from stock trades. An example is an executive selling or shorting stock of his company because it’s going to file for bankruptcy before that’s announced to the public. Another example is a trader using tips from company insiders to trade on non-public information that causes the company’s stock to go up or down.
The fact Burr and Loeffler yanked large sums of their own money out of stocks just before a market crash isn’t a crime in itself. That could have been lucky timing, or maybe they needed the money for some other purpose (such as a home purchase). These are things for investigators and prosecutors to determine. But they both had access to inside information suggesting the stock market was about to take a beating, and if they acted on that information for their own financial benefit, they may have committed a crime by doing so. The statute isn’t a paper tiger; the well-known TV guru Martha Stewart went to prison for doing something similar.
The reason it’s a crime is because it gives people with access to inside information an unfair advantage over other investors. In effect, it’s stealing. If Burr and Loeffler knew something the buyers of their shares didn’t know, and used it to take advantage of those investors for their own gain and to their detriment and loss, they’re crooks by our standards of illegal conduct. The law against insider trading makes it so.
It’s unreasonable to expect Trump’s administration — his attorney general and U.S. attorneys — to investigate or prosecute these or any other Republican politicians if they engaged in illegal insider trading. That task will be left to a Biden-appointed Department of Justice — if Biden becomes president next January. If he doesn’t, we’ll probably never know if what Burr, Loeffler, and possibly others did was legal or illegal, and they’ll all get off scot-free — with millions of dollars of arguably stolen money sitting in their personal bank accounts.