SEC warns of insider trading after Loeffler sales

Securities and Exchange Commission issued a sharp warning on Monday against the trade in non-public information related to the coronavirus, a warning came a few days after the announcement of the recent sales of shares by the CEO of the owner of the New York Stock Exchange and his wife, the senator, who aroused much criticism and asked for investigations.

The SEC co-directors of law enforcement’s “market integrity” statement did not refer to these transactions by NYSEC president Jeff Sprecher and Senator Kelly Loeffler, R-Ga., Ni to transactions by three other senators in the past two months.

The Sprecher and Loeffler transactions, involving sales of up to $ 3 million in securities, took place in the weeks before stock market indexes dropped significantly due to the coronavirus pandemic, and on the heels of a briefing. private, all senators, on the Trump administration health epidemic of virus that Loeffler attended on January 24.

In addition to Loeffler’s decision, the recently disclosed stock sales by three other senators, Richard Burr (R-NC), James Inhoffe (R-OK) and Diane Feinstein (D-CA) were reviewed and criticized for occurred after this coronavirus. Report.

Loeffler said last Friday that the transactions detailed in the Senate disclosure forms were made by third-party financial advisers without input or knowledge of it or Sprecher, who is CEO of the Big Board holding company, Intercontinental Exchange .

Over the weekend, CBS News, citing public filings with the SEC, said that in addition to these exchanges, Sprecher On February 26, he sold $ 3.5 million of his company’s stock, Intercontinental Exchange or ICE, at an average price of $ 93.42 each.ICE shares have since lost almost 25%.

Other SEC filings cited by CBS show Sprecher and Loeffler “also sold $ 15.3 million in ICE shares on March 11, at an average price of around $ 87 per share.”

Loeffler is by far the wealthiest member of Congress, sharing a net worth of around $ 500 million.

SEC directors in their statement noted that “coronavirus 2019 (COVID-19) has had an unprecedented impact on the securities markets.”

“In these dynamic circumstances, insiders of companies regularly learn important new non-public information that may be of even greater value than in normal circumstances,” said directors, Stephanie Avakian and Steven Pelkin.

“This may be particularly the case if the earnings reports or disclosure statements required by the SEC are delayed due to COVID-19,” the directors said.

According to the statement, “in these unique circumstances, more people can access important non-public information than in less difficult times.”

“Those with such access, including, for example, directors, officers, employees and consultants and other outside professionals should be aware of their obligations to keep this information confidential and to comply with the prohibitions on illegal trading in securities”, wrote the administrators.

“Trading corporate securities on the basis of inside information may violate the anti-fraud provisions of federal securities laws.”

The SEC declined to comment when asked if the new statement was prompted by news last week about the recent Sprecher and Loeffler transactions, and if the SEC is investigating those transactions.

Neither Sprecher, Loeffler, nor the other three senators have been charged with wrongdoing by the SEC or any other regulatory or law enforcement agency.

Financial disclosure forms recently filed by Loeffler reveal that the couple’s accounts had close to 30 stock trades since January 24, the day she and other senators were informed of the coronavirus by Trump administration officials. Sales started on the day of this briefing.

Over the next three weeks, Loeffler and Sprecher sold shares worth $ 1.25 million to $ 3.1 million, according to the disclosure documents.

But on February 14, accounts held by Loeffler and Sprecher bought shares in Citrix, which provides telework software, and inOracle, the technology company.

Many Americans have worked remotely from their homes as businesses shut down or downsized their offices due to the COVID-19 crisis.

Intercontinental Exchange, which has other exchanges and clearing houses in addition to the NYSE, said in a statement last week that all of the transactions involving the couplewere “consistent” with company policies.

“Mr. Sprecher and Senator Loeffler made it clear that these transactions were carried out by their financial advisers without the input or direction of Mr. Sprecher or Senator Loeffler,” the company said.

“These transactions comply with the policies and procedures of Intercontinental Exchange, Inc.”

Loeffler, in an interview with CNBC “The Exchange” last Friday, said, “I am very confident that we have followed the letter and the spirit of the law.”

“I had no involvement in the decisions” to trade the shares, said the first-year lawmaker. “I have no discretion over … our portfolio.”

In a tweet, she called an article exposing her trading “a ridiculous and baseless attack”.

Good government groups have filed complaints with various entities requesting inquiries into Loeffler’s trade, as well as into stock sales by Burr, Feinstein and Inhofe.

The Common Cause group said Friday it had filed complaints with the SEC, the Department of Justice and the Senate ethics committee “calling for immediate investigations” into Loeffler, Burr, Feinstein and Inhofe “for possible violations STOCK and insider trading laws. “

STOCK law prohibits members of Congress from using inside information from their official positions for personal gain.

Another group, Citizens for Responsibility and Ethics in Washington, has filed a complaint with the Senate Ethics Committee request probes from Loeffler and Burr for possible STOCK law violations.

Inhofe reported sales in its accounts were part of the ongoing sales he ordered for all of his inventory when he became chair of the Senate Armed Services Committee in September 2018.

Feinstein said sales of shares reported on her disclosure were made by her husband.

“I have no input into her decisions,” said Feinstein in a statement, which noted that under Senate rules, she reports on her spouse’s financial transactions.

“My husband sold shares of a cancer therapy company in January and February. This company is not linked to any work on the coronavirus and the sale was unrelated to the situation.”

Representative Alexandria Ocasio-Cortez, D-N.Y., Called on Burr and Loeffler to resign, tweeting: “It is appalling that the first thoughts of these senators were disastrous and classified #COVID the briefing was how to take advantage of this crisis. “

“They did not mobilize to help the families or prepare a response. They threw stocks,” wrote Ocasio-Cortez.

In a statement Friday, Burr said his decision to unload his stock was based “on public information only,” including that of CNBC offices in Asia about the spread of the coronavirus.

“Understanding the assumption that many might step back, however, I spoke this morning with the chair of the Senate Ethics Committee and asked him to open a full review of the matter transparently,” said Burr. .

On February 13, a week before US stocks started to fall, Burr sold more than $ 500,000 in stocks in one day.

Sales amounted to 33 individual transactions, and if they totaled the high end that Burr said, around $ 1.7 million, that would be equivalent to almost all of his net worth.