Making money in times of distress is an art. But some breach the limits. Two US politicians are facing scrutiny after it has emerged that they sold off massive chunks of stock after receiving high-level coronavirus briefings. The sell-off was quite in time, sparing themselves biting losses, which millions of investors suffered later on.
The US politicians under the shadow are Republican Senators Richard Burr and Kelly Loeffler.
Privy to classified information at coronavirus briefings
The breach of political trust stems from the fact that the senators had privileged access to information about the scope of damage from the coronavirus, which was not not available to the public. And they received the information as early as January 24.
It has been accused that Burr Loeffle were getting daily coronavirus briefings ever since the outbreak assumed serious nature. It has been reported they had access to classified information much before the market rout happened. This allowed them to sell millions worth of stocks in 33 separate transactions before the Wall Street bloodbath.
Kelly Loeffler, the richest member Senator in the United States, started selling shares on January 24, the day she received crucial information at the Senate Health Committee briefing. She dumped stocks worth up to $3.1 million between January 24 and February 14. Some of these shares were owned jointly with her husband.
Various media outlets reported that Burr and his wife Brooke sold up to $1.7 million worth of stocks on February 13, just a week ahead of the market crash.
Who is Kelly Loeffler?
Kelly Loeffler is the freshman Senator from Georgia. She is the wife of Jeffrey Sprecher, the chairman and CEO of Intercontinental Exchange, the parent company of New York Stock Exchange. Loeffler is the richest member of Congress, worth around an estimated $500 million. She also was the chief executive officer of Bakkt, a subsidiary of Intercontinental Exchange.
It has emerged that Loeffer was privy to the information that a wide-based shutdown of businesses was imminent and companies would resort to work from home. Based on this information, she bought shares in work-from-home related company Citrix. She bought share on February 14. Citrix specializes in teleworking software.
Who is Richard Burr?
Richard Mauze Burr is the senior Republican senator from North Carolina. He is also a businessman. ProPublica reported Burr sold the stock around mid-February, a week before the market crash started. According to ProPublica, some of the shares sold were in Wyndham Hotels and Resorts. The company went on to lose two-thirds of its value following the market crash.
Burr's spokesperson said "personal transactions made several weeks before the U.S. and financial markets showed signs of volatility due to the growing coronavirus outbreak."
Calls for resignation
Democratic Congresswoman Alexandria Ocasio-Cortez called for the resignation of Burr. She said Burr got private briefings about Coronavirus weeks ago. "Burr knew how bad it would be. He told the truth to his wealthy donors, while assuring the public that we were fine. THEN he sold off $1.6 million in stock before the fall. He needs to resign," Cortez tweeted.
US equities bloodbath
The equities bloodbath in the US is evident when the current levels are compared with the peak in mid-February. The Dow Jones Industrial Average peaked on February 12, hitting 29,551 points. On March 16 -- a little more than a month later -- the index stood at 21,600 points, which means it has lost some 8,000 points or 27 percent. On the other hand, the S&P 500 index was at 3,386 points on Feb. 19. It is now hovering around 2,500 points, a sharp fall of more than 25 percent.