Digging deeper: Feinstein, Loeffler cough up documents in FBI's insider-trading probe

Richard Burr has some company for his ride through Scandalville, it appears. Yesterday, the chair of the Senate Intelligence Committee stepped away from that role after the FBI served a warrant on him and confiscated his cell phone and other records. Late last night, it turned out that the FBI had paid visits to two of Burr’s Senate colleagues, too — Democrat Dianne Feinstein and Republican Kelly Loeffler.

Feinstein’s office says that the FBI only asked her some “basic questions” about her husband’s oddly-timed stock trading while Congress was being briefed about COVID-19:

“Senator Feinstein was asked some basic questions by law enforcement about her husband’s stock transactions. … She was happy to voluntarily answer those questions to set the record straight and provided additional documents to show she had no involvement in her husband’s transactions,” a spokesman said.

Feinstein’s conversation with the FBI took place in April, and the spokesman said that “there have been no follow up actions on this issue.”

Feinstein’s husband sold shares of Allogene Therapeutics, a California biotechnology company, on Jan. 31 and at least $1 million in Allogene stock on Feb. 18, according to Senate records.

Feinstein told CNN in March that she had “no input” in her husband’s finances.

“I have no input into his decisions. My husband in January and February sold shares of a cancer therapy company. This company is unrelated to any work on the coronavirus and the sale was unrelated to the situation,” she said, according to CNN.

That’s an interesting framing for the question of benefit. People buy shares in companies that are likely to be boosted in a crisis. They sell shares in other companies when a crisis is definitely on the horizon. Politico puts this in a more complete context, noting that the timing of these stock dumps likely saved Blum one hell of a lot of money:

Her husband, Richard Blum, is an investment banker who reportedly sold his shares in a biotech company in January before the coronavirus crisis sent the stock market into a tailspin. The transaction was reported in Feinstein’s routine Senate financial disclosure forms, and her spokesman said at the time the senator has no involvement in her husband’s stock trades.

No, but that’s not the question either. If Feinstein passed along non-public information to her husband and he used it for personal gain, that’s still insider trading. Ask Christopher Collins about how that works when one farms out tips to family members. Or ask Burr, whose brother-in-law is also an apparent target of the FBI’s investigation. Feinstein’s statement makes it clear that this isn’t a blind trust, and that those decisions are made in the household.

Loeffler got a visit not just from the FBI but also from the FEC, Politico reported separately last night. Loeffler, whose husband is chair of the New York Stock Exchange, might have a better answer on buffers than Feinstein or Burr:

Sen. Kelly Loeffler has turned over documents to the Justice Department, the Securities and Exchange Commission and the Senate Ethics Committee amid ongoing scrutiny over her stock trades, according to her spokesperson.

In a statement released Thursday, the Georgia Republican’s spokesperson said the documents showed that she and her husband, Jeffrey Sprecher, chairman of the New York Stock Exchange, “acted entirely appropriately and observed both the letter and the spirit of the law.”

“The documents and information demonstrated her and her husband’s lack of involvement in their managed accounts, as well the details of those accounts,” the statement said.

If the Loeffler/Sprecher holdings are in a true blind trust, then she has nothing to worry about. If that’s not a true blind trust — if the managers of the assets get direction from their clients — then this might not be much of a defense, either. The prescience of these trades certainly look oddly fortunate in retrospect, but on the other hand, Sprecher didn’t get to be NYSE chair because he makes bad trades.

In other words, there’s smoke. Is there fire? And these days, can we trust the FBI to find it if there is, or not to start one themselves if there isn’t? I’d guess that there are now at least three senators who regret making insider trading by members of Congress a statutory crime for the DoJ to investigate rather than keep it an ethics issue that would remain in house.

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