As Covid Hit, Washington Officials Traded Stocks With Exquisite Timing

In January 2020, the U.S. public was largely unaware of the threat posed by the virus spreading in China, but health officials were on high alert and girding for a crisis.

A deputy to top health official Anthony Fauci reported 10 sales of mutual funds and stocks totaling between $157,000 and $480,000 that month. Collectively, officials at another health agency, Health and Human Services, reported 60% more sales of stocks and funds in January than the average over the previous 12 months, driven by a handful of particularly active traders.

By March, agencies across the government were working on wide-reaching measures to prop the economy and markets. Then-Transportation Secretary Elaine Chao purchased more than $600,000 in two stock funds while her agency was involved in the pandemic response and her husband, Republican Sen. Mitch McConnell, was leading negotiations over a giant, market-boosting stimulus bill.

And as the government was devising a loan package aimed specifically at helping companies including Boeing Co. and General Electric Co., a Treasury Department official involved in administering the aid acquired shares of both companies.

Federal officials owned millions of dollars of stock in industries most affected by the pandemic and the government’s response. About 240 officials at health agencies and at the Pentagon, a key player in the vaccine rollout, reported owning a total of between $9 million and $28 million in stocks of drug, manufacturing and biotechnology companies that won federal contracts related to Covid-19 in 2020 and 2021, the Journal’s analysis found.

Nearly 400 officials across 50 agencies reported owning stocks in airline, resort, hotel, restaurant and cruise companies in early 2020, the review found.

By March, every major agency was drawn into the pandemic response. That month was the most active for trading by officials across the federal government, including at HHS, in the Journal’s analysis of financial disclosure forms for about 12,000 officials spanning 2016 to 2021. Federal officials reported more than 11,600 trades that month, 44% more than in any other month in the analysis.

The health agencies didn’t respond to requests for comment. A Pentagon spokeswoman said most defense personnel don’t work on matters affecting large defense contractors or affecting the finances of private companies, and said the department is “committed to preventing conflicts of interest.”

Senior federal officials are required to disclose their financial assets and transactions and those of their spouses and dependent children in annual reports.

Federal employees are barred from working on matters in which they have a significant financial stake, from trading on nonpublic information learned on the job and from taking any official action that creates an appearance of a conflict of interest.

Agency ethics officials rarely have a complete picture of what employees are working on or privy to, especially during a fast-moving, governmentwide mobilization in response to a national emergency.

Most agencies’ ethics rules focus on what kinds of stocks officials can trade, not when they can trade. And there are no restrictions on federal officials’ investing in diversified mutual funds, which were more volatile than usual early in the pandemic. Ethics officials certified that the employees identified by the Journal were in compliance with these rules.

Three days into January 2020, top U.S. health officials were alerted to an unexplained virus sickening people in China.

By late January, Centers for Disease Control and Prevention leaders were rushing to develop accurate tests, National Institutes of Health officials were taking the first steps toward developing a vaccine, and the Food and Drug Administration was racing to facilitate prevention and treatment options for the novel coronavirus.

On Jan. 24, four days after the CDC publicly reported the first confirmed U.S. Covid-19 infection, Hugh Auchincloss, principal deputy director at the NIH’s National Institute of Allergy and Infectious Diseases, summed up the state of his agency in an email: “New coronavirus all the time.”

That same day, while the stock market remained lofty, Dr. Auchincloss reported selling $15,001 to $50,000 of a stock mutual fund. Days later he sold two more mutual funds and a stock, Chevron Corp., according to his financial disclosures, which give wide dollar ranges. That was just the beginning.

Dr. Auchincloss was invited to a Jan. 29 meeting of an NIH working group called the International Clinical Research Subcommittee. The top agenda item was “Wuhan coronavirus—plans for a response,” according to emails released in response to public-records requests.

On the last day of January, an email sent to Dr. Auchincloss and his boss, Dr. Fauci, signaled the severity of the threat. Public Health Service officers had been told they could be deployed, a health official wrote, and could assist with “quarantine efforts.”

Dr. Auchincloss disclosed six sales of mutual funds that day, totaling between $111,006 and $315,000 in value.

His January sales amounted to the largest number of transactions he had reported for a single month since 2018, according to his financial disclosures.

Each holding he sold fell sharply in the market downturn that soon followed, as the public and investors started paying attention to the threat posed by Covid-19.

Dr. Auchincloss, who retained some other holdings, didn’t respond to requests for comment. The National Institute of Allergy and Infectious Diseases declined to make him available for an interview.

The agency said that financial disclosure reports are routinely reviewed by NIH ethics officials to ensure compliance with reporting requirements and resolve potential conflicts of interest. It declined to say whether Dr. Auchincloss made the trades himself or had a managed account.

“As a matter of employee privacy, we will not disclose the additional information requested because it is beyond the public financial disclosure reporting requirements,” the agency said.

Among officials involved in the CDC’s early pandemic response was Stephen Redd, a veteran epidemiologist serving as deputy director for Public Health Service and Implementation Science at the agency. His role involved collecting information about the state of the virus and the federal response in order to brief lawmakers.

The CDC had a clear view of the virus’s threat by the end of January, Dr. Redd later told a student interviewer in Atlanta. “It was easy to see it was going to be a really big problem,” he said.

Dr. Redd disclosed sales of between $95,004 and $250,000 in stocks and bonds in January. He reported the sale in February of $100,001 to $250,000 of bonds, along with purchases of between $2,002 and $30,000 of short-term bond funds, a low-risk investment.

Dr. Redd said he had no advance knowledge of these trades, which he said were in his wife’s retirement account and made by a financial adviser. He said he didn’t learn of them until that summer, although he was required by law to report any trades made in his or his wife’s accounts within 30 days.

He acknowledged that federal officials are “responsible for knowing” about their financial transactions. He said neither he nor his wife knew why the adviser made the trades.

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The House fails to pass bill barring lawmakers from stock trading

Democrat Rep. Abigail Spanberger of Virginia excoriated her party leadership including House Speaker Nancy Pelosi and House Majority Leader Rep. Steny Hoyer for delaying a potential vote this week meant to ban lawmakers from holding and trading in stocks. Spanberger even called for new leadership in the Democrat party.

Spanberger had partnered with Rep. Chip Roy (R-Tex.) to introduce the Transparent Representation Upholding Service and Trust in Congress Act on Jan. 15, 2021. The legislation had 71 co-sponsors, ranging from Republican Rep. Matt Gaetz of Florida to squad member Rep. Ilhan Omar of Minnesota.

The legislation would have required lawmakers and immediate family members to place stocks in a blind trust. 

Business Insider magazine’s Conflicted Congress investigation in December 2021 revealed dozens of STOCK Act violations, and numerous potential conflicts of interests driven by lawmakers’ stock holdings, as well as paltry enforcement of anti-insider trading rules. Forty-nine members of Congress and 182 senior congressional staffers violated laws aimed at preventing insider trading.

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Nancy Pelosi’s Husband Buys Millions In Chip Stocks Right Before Vote On Massive Chip Subsidy

House Speaker Nancy Pelosi’s husband Paul bought up to $5 million in stock of a computer chip company ahead of a vote on a bill next week that would hand billions in subsidies to boost chip manufacturing, a financial disclosure shows.

Paul Pelosi purchased 20,000 shares of Nvidia, one of the world’s largest semiconductor companies, on June 17, according to the speaker’s disclosure report released Thursday. Now, senators will convene as early as Tuesday to vote on a bipartisan competition bill, which allocates $52 billion to boost domestic semiconductor manufacturing and gives tax credits for production, Reuters reported Thursday.

“It certainly raises the specter that Paul Pelosi could have access to some insider legislative information,” Craig Holman, a government affairs lobbyist for the left-wing think tank Public Citizen, told the Daily Caller News Foundation. “This is the reason why there is a stock trading app that exclusively monitors Paul’s trading activity and then its followers do likewise.”

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See every stock trade House Speaker Nancy Pelosi’s husband has made since 2021

As members of Congress debate whether lawmakers and their spouses should play the stock market, House Speaker Nancy Pelosi’s husband, Paul Pelosi, a venture capitalist, continues to regularly buy and sell stocks and stock options.

Pelosi has access to confidential intelligence and the power to affect — with words or actions — the fortunes of companies in which her husband invests and trades.

When asked in December 2021 whether members of Congress should even be allowed to trade stocks, Pelosi answered in the affirmative.

“We are a free-market economy. They should be able to participate in that,” she said.

This led some of her colleagues, on both the left and the right, to sharply criticize her — and draft legislation to restrict members of Congress and their spouses from trading stocks.

“Year after year, politicians somehow manage to outperform the market, buying and selling millions in stocks of companies they’re supposed to be regulating,” Republican Sen. Josh Hawley said. “Wall Street and Big Tech work hand-in-hand with elected officials to enrich each other at the expense of the country. Here’s something we can do: ban all members of Congress from trading stocks and force those who do to pay their proceeds back to the American people. It’s time to stop turning a blind eye to Washington profiteering.”

Sen. Jon Ossoff, a Democrat, introduced a similar bill alongside Sen. Mark Kelly with the intent to ban members of Congress and their families from trading stocks.

“Members of Congress should not be playing the stock market while we make federal policy and have extraordinary access to confidential information,” Ossoff said.

Pelosi has since softened her stance, but the fate of a congressional stock-trade ban remains unclear.

A previous analysis from Insider estimated that the Pelosis are worth at least $46,123,051, making Nancy Pelosi one of the 25 richest members of Congress. The vast majority of the couple’s wealth is derived from stocks, options, and investments made by Paul Pelosi.

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