The Senate offices of Kelly Loeffler, Dianne Feinstein, and Jim Inhofe were informed on Tuesday that the DoJ was dropping the investigations into insider trading by the senators just prior to the coronavirus pandemic hitting America.
A fourth senator, Richard Burr, is still under a cloud as the FBI recently executed a search warrant against his homes and phones. Burr recently resigned from his position as Senate Intelligence chairman.
The senators had all made stock trades after a private briefing in Congress gave them knowledge not generally available to the public.
The Justice Department’s decision to drop its probe into Loeffler is welcome news for the senator, who faces a serious challenge from Rep. Doug Collins (R-Ga.) in a November special election.
“Today’s clear exoneration by the Department of Justice affirms what Sen. Loeffler has said all along: She did nothing wrong,” said Stephen Lawson, a spokesperson for Loeffler. “This was a politically motivated attack shamelessly promoted by the fake news media and her political opponent.”
Collins is a down-the-line Trump man who would probably do a little better in a general election race than Loeffler. Georgia could be a problem for Republicans as the Democrats are well funded and out for blood.
But it’s still Georgia and it’s still a nominally Republican state. Until Democrats can prove otherwise, either Loeffler or Collins should be able to beat whatever Democrat runs against them.
Senator Inhofe was glad the DoJ exonerated him. He told The Oklahoman, “As I’ve said all along, I wasn’t even at the briefing and do not make my own stock trades. I did nothing wrong, and I’m pleased the Justice Department has exonerated me.”
As for Senator Burr, it doesn’t look like he will be exonerated anytime soon. Burr says he did nothing wrong, that his stock trades were based on information that was publicly available.
But the senator attended two classified briefings on the pandemic and wrote an op-ed for Fox News that suggested the U.S. was “better prepared than ever before.” A few days later, he told some donors that it was going to get very bad, similar to the 1918 flu pandemic.
Jonathan Turley thinks Burr may eventually be cleared.
Like ethics investigations, these investigations often serve to simply “clear” a politician who is allowed under lax ethical rules to trade in areas of their legislative and committee work. The Stop Trading On Congressional Knowledge Act, also known as the Stock Act, applies the same insider trading rules to members and staff that are applied to company executives. While fines are possible, they are unlikely. Insider trading cases are hard for prosecutors to make against members of Congress because the law was designed to punish corporate officials who trade stocks by using proprietary information. Members of Congress do not deal with proprietary information held by company executives and, even with the broader definitions applied by the courts, it would be very difficult to use the legal language to fit legislative profiteering.
In Burr’s case, there was already ample media on the rising danger of the virus. In other words, Burr could have made the decision to trade entirely on publicly available information. Members are not required to freeze trades when others are trading. Leading investors have bragged recently of making such trades and beating the crash.
So it appears that Burr and other elected lawmakers can buy and sell stocks and bonds based on their intimate knowledge of what’s happening in America with no penalty save being defeated for re-election. Yes, it’s corrupt and unfair to the average investor. But rich people will be rich people. In many cases, they didn’t get that way by following the letter of the law.
It’s a system that cries out for reform. An unlikely scenario, given who would be doing the reforming.