DOJ Closes Three Insider Trading Investigations Of U.S. Senators

US-DeptOfJustice-Seal_svgsenate_large_sealWe previously discussed the insider trading allegations against Senators Richard Burr (R., N.C.) Dianne Feinstein (D., Cal.), James Inhofe (R., Okla.), and Kelly Loeffler (R., Ga.) over the selling of stocks after briefings early in the pandemic.  As I stated earlier, I am highly skeptical of such cases as a criminal defense attorney as viable due to the difficulty in both the elements and the proof needed for such a charge.  Yesterday, the Justice Department dropped three of the four investigations. Only Burr remains under investigation.

Richard_Burr_official_portraitThe continuing investigation of Burr is not surprising since he admitted that he personally directed the trades himself while insisting that he relied entirely on public media accounts.

 As I discussed in a column, such prosecutions are exceptionally difficult to bring by design. Like ethics investigations, these investigations often serve to simply “clear” a politician who is allowed under lax ethical rules to trade in areas of their legislative and committee work. The Stop Trading On Congressional Knowledge Act, also known as the Stock Act, applies the same insider trading rules to members and staff that are applied to company executives. While fines are possible, they are unlikely. Insider trading cases are hard for prosecutors to make against members of Congress because the law was designed to punish corporate officials who trade stocks by using proprietary information. Members of Congress do not deal with proprietary information held by company executives and, even with the broader definitions applied by the courts, it would be very difficult to use the legal language to fit legislative profiteering.

In Burr’s case, there was already ample media on the rising danger of the virus. In other words, Burr could have made the decision to trade entirely on publicly available information. Members are not required to freeze trades when others are trading. Leading investors have bragged recently of making such trades and beating the crash.

That does not mean that the DOJ has not found something incriminating and might try to address the difficult language of the elements of the crime. However, I remain highly skeptical.

13 thoughts on “DOJ Closes Three Insider Trading Investigations Of U.S. Senators”

  1. This is not constitutional freedom and free enterprise, this is dictatorship. The Constitution provides individual maximal freedom. Government exists to facilitate the maximal freedom of individuals through its sole charge to provide infrastructure and security.

    Success and failure are the domain of each individual.

    Insider trading laws are unconstitutional. Insider trading laws are absurd. Covetousness is not a rationale for legislation. There will always be the “first” person to trade and he will always be perceived as having some variant of advantage. No matter the endeavor in life, there are always individuals who got there “firstest!” Henry Ford insider-traded mass production in his Highland Park Ford Plant. Bill Gates insider-traded software in his garage. Wilbur and Orville Wright, not possessing copious amounts of business acumen, failed to successfully insider-trade commercial airline flight. “Some gotta win, some gotta lose, Good time Charlie’s got the blues” – Danny O’keefe.

    Americans enjoy constitutional immunity from regulation with three exceptions. Please cite the Constitution for regulation of anything other than the value of money, the “flow” of commerce among nations, states and Indian tribes (notice they not “native Americans) and land and naval Forces. Please cite the Constitution for prohibition against trading by any individual. Ridiculous.

    It is the requirement and responsibility of parents to teach their children the fundamental life lesson of caveat emptor. The next thing you know, the government will wipe your — for your because your parents didn’t teach you that. All men are created equal. The outcomes of their lives – their endeavors – are up to them. People must adapt to the outcomes of freedom. Freedom does not adapt to people, dictatorship does.

  2. Of course they traded on insider knowledge. That’s why politicians go in broke and come out millionaires. And of course they skate, because that’s how organized crime works.

  3. I totally agree with this JT opinion. There was plenty of public information out there when Burr did the trades. He has a right to control his own investments when based on public information. The fact that he’s the one remaining to investigate makes me wonder if it’s to keep him off from serving in the position(s) he held in committee, that’s really the reason to drag on this investigation.

  4. There was a tweet on the day the stocks were sold and some say it was Burr’s dog who tweeted. “Get out while the getting good!”

    Some say:. “A Burr in one. Has none.”

  5. One problem with insider trading laws was delineated by the disgraced Foster Winans a generation ago: the only reason to invest in individual equities is that you think you know something the other guy doesn’t.

    The real problem with Burr is that the man’s a capon. It’s hard to understand why North Carolina voters have seen fit to keep him in office for 20+ years.

  6. Maybe they will get him for lying to the FBI. Then Judge Sullivan can accuse him of being a traitor.

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