(CN) — Records showing that U.S. lawmakers with early reports on the coronavirus pandemic dumped private stock holdings before markets posted recordbreaking losses has roiled the nation, but some experts say criminal fallout is unlikely.
Courthouse News reached out to former federal prosecutors for their insights on the traditional avenues of accountability, from the difficulty in trying an inside-trading case to the toothlessness that tends to gum up congressional oversight.
“Probably there should be an absolutely bar on this,” Harry Sandick, a former prosecutor for the Southern District of New York, said in a phone interview. “You should be permitted to have, you know, mutual funds and things like that, but not individual stock.”
The idea also intrigued Jennifer Rodgers, who once prosecuted cases in the same district.
“You already have a lot of disclosure requirements when you take office,” Rodgers noted in a phone interview. “So, I don't think it should be done as just a knee-jerk reaction. On the other hand, it doesn't seem like such a huge thing. They can still own funds as long as they don't control them, and there can be blinding procedures in place.”
The anticorruption watchdog Citizens for Responsibility and Ethics in Washington already has called for a congressional investigation of possible insider trading on the pandemic, and its spokesman Jordan Libowitz noted such a ban would nip eyebrow-raising trades like these in the bud.
“There are a number of options and that's certainly a pretty solid one,” Libowitz said in a phone interview. “It would totally avoid this issue altogether if it were banned. I don't know if it's not necessarily the best option, but it is certainly better than the current situation.”
At a time of soaring distrust in national institutions, the U.S. public has been clamoring for action after a series of bombshell reports showed how Congress members — in particular, Senate Intelligence Committee Chairman Richard Burr and Senator Kelly Loeffler — dumped millions in securities while privy to confidential information about how the Covid-19 pandemic was expected to shatter the global economy.
NPR obtained a secret recording of Burr telling major donors three weeks ago — on the same day President Trump promised the illness would miraculously disappear — that the novel strain of coronavirus would be “akin to the 1918 pandemic,” where Spanish flu infected a quarter of the world’s population.
It would be another week before mounting evidence on insufficient medical supplies and other expected dangers of the virus would cripple financial markets. By that time, the North Carolina Republican had sold off up to $1.7 million in 33 separate transactions.
Senator Kelly Loeffler, another Republican from Georgia, meanwhile dumped hundreds of thousands in stocks after attending a Jan. 24 briefing on the coronavirus, but she bought between $100,000 and $250,000 in Citrix, a technology company whose teleworking software gave it a small boost during a time of market turmoil, as first reported by the Daily Beast.
“That looks kind of manipulative here,” remarked Sandick, referring to the Citrix stock purchase.
Now a white-collar defense attorney with Patterson Belknap, Sandick noted that he relies upon Citrix software as one of many attorneys working from home at the time of the national emergency.
