With US in COVID-19 panic, Sen. Perdue saw stock opportunity

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With US in COVID-19 panic, Sen. Perdue saw stock opportunity

Mensagempor miniming » 26 Nov 2020, 05:30

With US in COVID-19 panic, Sen. Perdue saw stock opportunity

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Republican Sen. David Perdue of Georgia carried out a series of well-timed stock transactions at the beginning of the coronavirus pandemic

WASHINGTON -- As the ravages of the novel coronavirus forced millions of people out of work, shuttered businesses and shrank the value of retirement accounts, the Dow Jones Industrial Average plunged to a three-year low.

But for Sen. David Perdue, a Georgia Republican, the crisis last March signaled something else: a stock buying opportunity.

And for the second time in less than two months, Perdue's timing was impeccable. He avoided a sharp loss and reaped a stunning gain by selling and then buying the same stock: Cardlytics, an Atlanta-based financial technology company on whose board of directors he once served.

On Jan. 23, as word spread through Congress that the coronavirus posed a major economic and public health threat, Perdue sold off $1 million to $5 million in Cardlytics stock at $86 a share before it plunged, according to congressional disclosures.

Weeks later, in March, after the company’s stock plunged further following an unexpected leadership shakeup and lower-than-forecast earnings, Perdue bought the stock back for $30 a share, investing between $200,000 and $500,000.

Those shares have now quadrupled in value, closing at $121 a share on Tuesday.

The Cardlytics transactions were just a slice of a large number of investment decisions made in the early days of the pandemic by Perdue and other senators. They stirred public outrage after it became clear that some members of Congress had been briefed on the economic and health threat the virus posed. The transactions were mentioned briefly in a story published by the Intercept in May.

Now that Perdue is locked in a pitched battle for reelection in a Jan. 5 runoff, his trades during a public health and economic crisis have become an issue in what already has become a negative, expensive campaign that will determine which party controls the Senate.

There is no evidence that Perdue, who is among the wealthier members of the Senate, acted on information gained as a member of Congress or through his long-standing relationship with company officials. It's illegal to use nonpublic information gained as a company insider or member of Congress to make investment decisions.

But legal experts say the timing of his sale, the fact that he quickly bought Cardlytics stock back when it had lost two-thirds of its market value and his close ties to company officials all warrant scrutiny.

“This does seem suspicious,” said John C. Coffee Jr., a Columbia University law school professor who specializes in corporate and securities issues. But he added, “You need more than suspicions to convict.”

The Perdue campaign declined a request for an interview with the senator. In a statement, Perdue spokesperson John Burke said the senator had been cleared of wrongdoing but did not provide details.

“The bi-partisan Senate Ethics Committee, DOJ and SEC all independently and swiftly cleared Senator Perdue months ago, which was reported on," Burke said.

Perdue's opponent, Democrat Jon Ossoff, has seized on his stock trading while trying to brand him as a “crook.”

Perdue is not the only senator on the ballot in Georgia. Sen. Kelly Loeffler, also a Republican, is running against Democrat Raphael Warnock in a bid to complete the remainder of retired Sen. Johnny Isakson's term.

Perdue's Cardlytics transactions fit into a broader pattern of stock moves he made when the coronavirus first struck the U.S.

At the time, Perdue publicly maintained that the economy was strong and praised President Donald Trump during a Feb. 24 interview on Fox News Channel for “executing the greatest economic turnaround in U.S. history.”

A series of swift transactions in his portfolio told a different story, however, showing the senator dumped some company stocks, while investing in others — like protective equipment maker DuPont and pharmaceutical company Pfizer — that were poised to do well during the pandemic.

Perdue has previously said that outside financial advisers make most of his trades.

But Donna Nagy, an Indiana University law professor, said that type of arrangement doesn’t preclude Perdue from directing an adviser to make specific transactions. She said one way for members of Congress to avoid questions about their financial holdings is to put them in a blind trust, which Perdue has not done.

“All of these questions about the motivations behind our members of Congress and their personal securities trading could be alleviated if Congress passed a law that limited investments,” said Nagy, who specializes in securities law. “Ordinary citizens should not have to question members of Congress about their investments.”

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