A lot of Americans are dismayed by what they see as unethical financial activity by key government officials. mcelarier reports on Washington D.C.'s insider-trading program
From left: Richard Burr, Nancy Pelosi, Jerome Powell, and Rand Paul have each made investments that raised questions. Photo-Illustration: Intelligencer. Photos: Getty Images The central bankers running the U.S. Federal Reserve are the closest thing we have to gods of the markets, their decisions on interest-rate policies and their bond-buying sprees watched breathlessly by everyone on Wall Street — and increasingly Main Street.
Of course, Fed officials aren’t the only Washington insiders who had access to market-moving information during the pandemic. A surprisingly large number of Congress members also appeared to have been able to use their inside knowledge for financial gain while unemployed Americans were lining up at food banks. Four senators were probed by the Department of Justice for insider trading, and at least one of them is still part of an active SEC investigation.
But Pelosi doesn’t seem interested in dodging controversy and tamping down suspicion by stepping out of the stock market. When asked in a press conference last month if members of Congress should be banned from trading stocks, she brushed off the notion as un-American. “We are a free-market economy. They should be able to participate in that,” she told reporters.
All of the senators denied wrongdoing, and the DOJ closed the investigation into the four with no action, with Burr’s ending on the final day of the Trump administration. But the North Carolina senator, who stepped down from his role as head of the Senate Intelligence Committee during the probe and plans to retire, is not out of the woods. In October, the SEC revealed in a federal-court filing that it is still investigating him for insider trading.
While lawmakers may argue the lapses are simply bookkeeping matters they forgot to take care of, that may not be the entire story, worries Kedric Payne, general counsel for the Campaign Legal Center, which has alerted the House Office of Congressional Ethics about several disclosure omissions.
The relatively few successful prosecutions of insider trading — think Martha Stewart or hedge-fund manager Raj Rajaratnam — tend to involve emails or phone calls and cooperating witnesses who can show not only the nonpublic information but also how it was used to trade.
The Burr case “underscores how hard it is to prove insider training because of how often you are dealing with quasi-public, quasi-not-public information in hearings and in briefings. It’s just really hard to parse what information they had access to and how it predicated some transaction,” says Hedtler-Gaudette.
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