Could COVID Insider Trading Scandals Cost Republicans the Senate?

Loeffler with Der Trumpenführer.

Martha Stewart went to prison for insider trading - using non-public information - in the sale of $230,000 of stock, an amount that pales in comparison to the amounts of stock sold by Republicans in the U.S. Senate after an special intelligence briefing on the coming pandemic and just before the stock market collapsed.  Using this privileged information, these senators avoid millions of dollars of losses while the rest of the public and retirement funds were slammed as the market cratered. Now, these individuals are under FBI and Security and Exchange Commission ("SEC") investigation for these "insider" deals.  Vanity Fair looks at the possible repercussions for Republicans.  Here are excerpts:

On Thursday, Senator Kelly Loeffler provided information to federal law enforcement about controversial stock trades she made just before the coronavirus-induced market crash. As Politico reported, the Georgia Republican turned over documents to the Justice Department, the Securities and Exchange Commission, and the Senate Ethics Committee. According to a statement released by her spokesperson on Thursday, the documents showed that she and her husband, New York Stock Exchange chairman Jeffrey Sprecher, “acted entirely appropriately and observed both the letter and the spirit of the law”—something Loeffler has maintained throughout, even as accusations of insider trading have swirled.

Loeffler’s decision to turn over documents came as another of her Republican Senate colleagues faces similar questions. On Thursday, North Carolina Senator Richard Burr announced he would step down from his position as Senate Intelligence Committee Chairman. Burr is being investigated for up to $1.72 million in stock sales he conducted just before coronavirus caused the market to plunge in February. The FBI has reportedly served a warrant for Burr’s cell phone, part of the Justice Department’s inquiry into whether he violated a law prohibiting members of Congress from acting on intelligence they’ve gleaned from their official work. Burr, like Loeffler, denies any wrongdoing.

As the Burr and Loeffler probes escalate, the Senate is facing fundamental questions around whether some of the most powerful lawmakers in the country should buy and sell stock at all. As my colleague Abigail Tracy reported last month, “the perception that anyone in Congress profited off of the coronavirus crisis is a blow to the institution.” In recent weeks, a bill that would prohibit members of Congress from owning individual stocks has gained traction, though Tracy notes that passing such a ban at the moment is unlikely.

The twin controversies have also inspired concern from senior Republicans about their ability to retain control of the Senate. The Washington Examiner’s David Drucker reported on Friday that the GOP is worried about its prospects, fearing that the investigation into Burr’s financial transactions could prompt his resignation before September 4. In that case, Drucker says, “a November special election would be triggered to fill the remainder of his term, multiplying the challenges Republicans face as they scramble to protect their 53-seat majority.” According to a Republican insider, “people still don’t know exactly what transpired, which is why the current review is important. But North Carolina already features what will be a very expensive Senate race, and another one would be quite challenging for Republicans.”