Will Loeffler face ethics probe over stock sales after COVID-19 briefing?

About the time U.S. Sen. Kelly Loeffler argued against the impeachment of President Donald Trump in early February, she and her husband sold off as much as $3.1 million in stocks after she participated in a private briefing for senators on the COVID-19 outbreak. This week the Wall Street Journal reported that the Department of Justice is no longer investigating her stock transactions.

WASHINGTON — Georgia Republican Sen. Kelly Loeffler, who’s at the center of a political firestorm after selling off stocks ahead of the COVID-19 pandemic, could face ethics investigations over her actions. 

Senate Minority Leader Chuck Schumer (D-N.Y.) said in an interview Saturday that there “should be and there will be” ethics investigations into senators accused of trading stocks to boost their personal finances during the crisis. 

Loeffler’s finances have been under scrutiny since media reports revealed that she and her husband sold off as much as $3.1 million in stocks after she participated in a private briefing for senators on the COVID-19 outbreak, which has since caused stocks to plummet. 

Loeffler has denied any wrongdoing. She has said her investment decisions are made by third-party advisers without her knowledge and that she didn’t know about the transactions until weeks later.

“Senator Loeffler’s integrity is being attacked by political opponents at a time when they are preying on the emotions of Americans during a national health emergency,” a Loeffler spokeswoman said. “She has said repeatedly that she is open to any and all questions.”

Now, the Georgia senator is facing calls for ethics inquiries into her actions. 

The Citizens for Responsibility and Ethics in Washington has asked the Senate Ethics Committee to investigate whether she violated federal laws or ethics rules. The group Common Cause filed complaints against Loeffler and other senators with the U.S. Department of Justice, the Securities and Exchange Commission and the Senate Ethics Committee. 

Senate Intelligence Committee Chairman Richard Burr (R-N.C.) has also been at the center of questions about his stock sales. He asked the Senate Ethics Committee to investigate allegations that he broke the law by using nonpublic information about the threat posed by the virus when he dumped up to $1.7 million of stocks in February. 

Georgia GOP Sen. David Perdue also sold off as much as $770,000 in stock in February, the Associated Press reported. He also purchased shares in Disney and Delta, both of which took a hit as a result of the outbreak. In his nearly 100 transactions from late January through mid-February, he bought and sold in equal amounts, the Atlanta Journal-Constitution reported. 

Casey Black, Perdue’s spokeswoman, said in a statement that Perdue has always had an outside advisor managing his personal finances, and he is not involved in day-to-day decisions.

“For the past five years, the Senator has gone above and beyond to fully comply with the law and Senate ethics requirements,” she added. “Every single transaction is reported on a monthly basis and made available to the public to ensure full transparency. Nothing has changed in how the senator’s portfolio is being managed during the coronavirus crisis, and he is currently working around the clock to help all Georgians make it through these challenging times.”

Senators judging ‘their own friends’ 

The Ethics Committee did not respond to a request for comment about whether it plans to launch investigations into any of the senators who sold stocks as the coronavirus outbreak accelerated. 

But critics of that committee are skeptical that it would conduct a serious investigation into senators facing such allegations.

The Senate Select Committee on Ethics operates largely in secret, dismisses the vast majority of allegations it receives and involves senators policing their own colleagues. The public usually doesn’t know which complaints are before the panel or how they’re resolved. 

The Senate Ethics Committee is “notorious” for covering up violations of ethics rules, rather than enforcing them, said Craig Holman, a government affairs lobbyist at the advocacy group Public Citizen. “They’re members … sitting in judgment of their own friends.” 

Largely, “the Ethics Committee is a place where investigations are left to die,” said Jim Manley, a Democratic strategist who served as an aide to then-Senate Majority Leader Harry Reid (D-Nev.). 

The Senate ethics panel — established in 1964 — is a bipartisan committee that consists of three Democrats and three Republicans. The full Senate has the authority to punish and oust its members, but the Ethics Committee is tasked with conducting investigations and making recommendations. The committee is now chaired by Sen. James Lankford, an Oklahoma Republican. 

After his stock activity made waves in the media, Burr sent a letter asking the Ethics Committee for a “full and expedited investigation” of his sales. 

“While I relied solely on public reporting to guide my decision to sell the stock, it is my belief that an independent review is warranted to ensure full and complete transparency,” he wrote. 

Committee ‘moves very, very slowly’ 

It’s possible that the public won’t be alerted if an ethics investigation is launched, and investigations can be lengthy. 

“If the [ethics] committee chooses not to issue a public statement, all allegations are treated confidentially and the committee has a practice of neither confirming nor denying that a matter is before the committee,” according to a Congressional Research Service report about the panel. 

And the committee has no set timeframe for its investigations, which can generally take months, the committee’s former chief counsel and staff director told CBS in 2017. 

“Intentionally or not, the Ethics Committee moves very, very slowly,” Manley said. 

The committee’s website links to only eight news releases issued over the past decade. Four of those statements announced preliminary inquiries into specific senators, but indicated that such public comments were unusual. 

In Nov. 2017, as then-Sen. Al Franken (D-Minn.) came under fire for sexual harassment allegations, the Senate ethics panel wrote, “While the Committee does not generally comment on pending matters or matters that may come before it, in this instance, the Committee is publicly confirming that it has opened a preliminary inquiry into Senator Franken’s alleged misconduct.” 

Franken resigned in Jan. 2018, before the ethics panel had made its recommendations. 

In April of 2018, the committee admonished Sen. Bob Menendez (D-N.J.) over failing to acknowledge certain gifts from a friend and donor. The committee had started its investigation in 2012, but put it on pause during a criminal investigation into Menendez. 

The committee has the authority to recommend expulsion, censure and other disciplinary measures to the full Senate. It can also report violations of the law to the proper federal and state authorities. 

Dating back to July 30, 2002, the committee has publicly admonished six senators, according to links to those letters on the panel’s website. 

But most complaints lodged with the committee are resolved privately. 

The panel has received between 26 and 251 complaints of alleged violations of Senate rules annually over the past decade. The vast majority of those complaints are dismissed, according to a review of the committee’s annual reports dating back to 2010. From 2010 through 2019, three letters of admonition were issued and no allegations resulted in disciplinary sanctions, according to the reports. 

The Senate hasn’t expelled any members since the 1860s, when 14 were ousted for supporting the Confederacy during the Civil War. 

Democrats demand ‘immediate explanation’ 

Democrats are pressing for more answers from GOP senators who sold stocks in the weeks and months before the outbreak worsened. 

“While American workers and small businesses across the country are suffering, these wealthy Republican senators padded their stock portfolios using exclusive information about the coming coronavirus pandemic while outwardly dismissing the very real risks to our economy and public health,” said Democratic Senatorial Campaign Committee spokesperson Helen Kalla. 

“Senators Burr, Loeffler, and Perdue owe their constituents an immediate explanation.”

Sens. Dianne Feinstein (D-Calif.) and Jim Inhofe (R-Okla.) are also among the senators who reported stock sales ahead of the stock market’s tumble, CNN reported. Both senators said they weren’t involved in the investment decisions. 

Beyond the Senate ethics panel, Holman of Public Citizen said the executive branch could get involved to investigate allegations of insider trading by members of Congress. 

Critics claim that senators may have violated the Stop Trading on Congressional Knowledge (STOCK) Act, 2012 legislation that bars lawmakers and their staffs from using information that isn’t publicly available when they buy or sell stocks. 

Burr was one of three senators who opposed the passage of the law. He said in a radio interview at the time that he was one of the “brave souls” who opposed the legislation, suggesting that it wasn’t necessary. “The laws that are currently on the books apply to all members of Congress and all staff,” he said. 

The uproar caused by lawmakers selling stocks during the coronavirus outbreak could prod Congress to toughen disclosure requirements, Holman said. 

“I want to see Congress reinstate a full disclosure system for these stock transactions,” he said. In 2013, Congress repealed some significant pieces of the law’s disclosure requirements.