Image default
Global Events

2,596 Trades in One Term: Inside Senator Perdue’s Stock Portfolio

Advertisement

Continue reading the main story

The Georgia Republican’s stock trades have far outpaced those of his Senate colleagues and have included a range of companies within his Senate committees’ oversight, an analysis shows.

Senator David Perdue’s stock trading accounts for nearly a third of all Senate trades reported in the past six years. Senator David Perdue’s stock trading accounts for nearly a third of all Senate trades reported in the past six years.Credit…Caroline Brehman/CQ Roll Call/Bloomberg, via Getty Images

  • Dec. 2, 2020

As a member of the Senate’s cybersecurity subcommittee, David Perdue has raised alarms that hackers from overseas pose a threat to U.S. computer networks. Citing a frightening report by a California-based company called FireEye, Mr. Perdue was among the senators who asked this spring that the National Guard prepare to protect against such data breaches.

Not only was the issue important to Mr. Perdue, so was FireEye, a federal contractor that provides malware detection and threat-intelligence services. Beginning in 2016, the senator bought and sold FireEye stock 61 times, at one point owning as much as $250,000 worth of shares in the company.

Along with Senator Kelly Loeffler, a fellow Georgia Republican, Mr. Perdue faces an unusual runoff election in January. With control of the Senate at stake, and amid renewed concern about the potential for conflicts of interest in stock trading by members of Congress, Mr. Perdue’s investment activity — and especially his numerous well-timed trades — has increasingly come into the public glare.

Last week, The New York Times reported that the Justice Department had investigated the senator for possible insider trading in his sale of more than $1 million worth of stock in a financial-analysis firm, Cardlytics. Ultimately, prosecutors declined to bring charges. Other media outlets have revealed several trades in companies whose business dealings fall under the jurisdiction of Mr. Perdue’s committees.

An examination of Mr. Perdue’s stock trading during his six years in office reveals that he has been the Senate’s most prolific stock trader by far, sometimes reporting 20 or more transactions in a single day.

The Times analyzed data compiled by Senate Stock Watcher, a nonpartisan website that aggregates publicly available information on lawmakers’ trading, and found that Mr. Perdue’s transactions accounted for nearly a third of all senators’ trades reported in the past six years. His 2,596 trades, mostly in stocks but also in bonds and funds, roughly equal the combined trading volume of the next five most active traders in the Senate.

The data also shows the breadth of trades Mr. Perdue made in companies that stood to benefit from policy and spending matters that came not just before the Senate as a whole, but before the committees and subcommittees on which he served.

Nearly half of Mr. Perdue’s FireEye trades, for example, occurred while he sat on the cybersecurity panel, a role that potentially could have provided him with nonpublic information about companies like FireEye. During that period, FireEye landed a subcontract worth more than $30 million with the Army Cyber Command, which had operations at Fort Gordon, in Mr. Perdue’s home state. In 2018, Mr. Perdue reported capital gains of up to $15,000 from FireEye trades.

ImageAn analyst at FireEye, a company whose stock Mr. Perdue has bought and sold 61 times. Its business dealings fall under the jurisdiction of one of Mr. Perdue’s Senate committees. An analyst at FireEye, a company whose stock Mr. Perdue has bought and sold 61 times. Its business dealings fall under the jurisdiction of one of Mr. Perdue’s Senate committees.Credit…Beck Diefenbach/Reuters, via Alamy

And as a member of the Senate banking, housing, and urban affairs committee since 2017, Mr. Perdue bought and sold shares of a number of financial companies his panel oversaw, including JPMorgan Chase, Bank of America and Regions Financial.

Mr. Perdue disputes the notion that his investment activity posed a conflict, saying that his trades were handled by outside advisers without his input, although his instructions to Goldman Sachs to sell Cardlytics suggest that he directed at least some trades.

“Senator Perdue doesn’t handle the day-to-day decisions of his portfolio — all of his holdings are managed by outside financial advisers who make recommendations, set strategy, and manage trades and personal finances,” said John Burke, the communications director for the senator’s re-election campaign.

Robert Hutchinson, Mr. Perdue’s wealth manager at Goldman Sachs, declined to comment.

In April, after questions were raised about stock trades that Mr. Perdue and other senators had made around the onset of the coronavirus pandemic, he abruptly sold virtually all of his stock holdings — between $3.2 million and $9.4 million worth. (Members of Congress report their transactions in ranges, so it is often impossible to pinpoint the exact dollar values.) In May, he announced that his advisers would no longer trade in individual stocks for his portfolio, with the exception of a few companies on whose boards he had previously served, including Cardlytics; the utility Alliant Energy; and Graphic Packaging, a paper-based-packaging provider.

Though Mr. Perdue has been unusually active in stock trading, his robust investing activity highlights broader questions once again being debated, more than eight years after the passage of the STOCK Act, a law meant to grapple with the ethical issues inherent in lawmakers’ buying and selling stocks.

While there is no law or regulation prohibiting such trading, the practice has long invited questions about possible conflicts — and the potential for insider trading — that can arise when members of powerful congressional committees buy and sell shares of companies directly affected by the issues before them. (By comparison, avoiding some or all individual stocks is common practice in other branches of government, where federal law prohibits most employees from engaging in matters whose outcomes may have financial implications for them.)

“Members are in a constant state of gathering information from briefings, hearings, constituent meetings, investigations and staff,” said Aaron Cooper, special counsel to the law firm Jenner & Block who previously served as lead minority investigative counsel to the Senate Intelligence Committee. “They receive a massive amount of data every day — both public and nonpublic — and it’s not always clear which category the information belongs to.”

As a result, he said, “prosecutors often face an uphill battle” in making an insider-trading case against a member of Congress.

The trend on Capitol Hill was already moving away from individual stock holding when Mr. Perdue was elected in 2014. Many senators had reduced their trading in individual stocks after the 2012 STOCK Act, which prohibited members of Congress from trading on nonpublic information acquired in the course of their duties. An analysis by Public Citizen published in 2017 credited the legislation with a 50 percent decline in stock trading by senators.

President Barack Obama signing the Stop Trading on Congressional Knowledge, or STOCK, Act in 2012.Credit…Stephen Crowley/The New York Times

Mr. Perdue’s Democratic challenger, Jon Ossoff, has seized on the trading as a campaign issue. In a news conference on Monday, he accused Mr. Perdue of “using his office to enrich himself” through the stock trades. A spokesman for Mr. Perdue called the critique a “discredited line of attack” that was “baseless,” and his campaign recently unveiled an ad arguing that he was “totally exonerated” by federal overseers who had studied his trades.

Yet others have also found fault with Mr. Perdue’s trading.

In a letter last week to the Securities and Exchange Commission, Representative Raja Krishnamoorthi, an Illinois Democrat, requested an investigation of Mr. Perdue’s trades in BWX Technologies, a Virginia-based company that supplies nuclear components for Navy submarines. The trades were first reported by The Daily Beast.

Mr. Perdue began buying the company’s stock about a month before he took over as chairman of the Senate’s seapower subcommittee, where he pushed to beef up the nation’s defenses, including by adding a multibillion-dollar nuclear submarine of the type BWX Technologies provides components for.

He reported earning between $15,000 and $50,000 in capital gains when he sold the stock.

Senator Jeff Merkley of Oregon, who believes that the STOCK Act does not go far enough, has co-sponsored legislation that would ban the trading of individual stocks by members of Congress.

“There is no way that the public can’t sense, can’t absolutely smell, that this is corrupt, that you have it in the back of your mind when you vote,” said Mr. Merkley, a Democrat. “You may have the public interest in your mind, but you also have in your mind how that decision might impact the value of your portfolio.”

Mr. Perdue, whose estimated net worth is more than $15 million, arrived on Capitol Hill in 2015, billing himself as an outsider and emphasizing his experience as a top executive at companies like Dollar General, Reebok and Haggar Clothing. He immediately established himself as a skeptic of government regulation, at various points suggesting the abolishment of both the Environmental Protection Agency and the Consumer Financial Protection Bureau.

As his term progressed, Mr. Perdue — or his advisers — would place some prescient bets in his portfolio, buying and selling stocks at just the right moment. His trading in Devon Energy, a company co-founded in 1971 by J. Larry Nichols, a major Republican donor, provides an example.

On Nov. 12, 2015, Mr. Perdue sold his position in Devon, worth between $50,000 and $100,000, on a day the stock’s price closed at $45.06. Over the next month, Devon’s price would fall as low as $31.54, a 30 percent drop from the date Mr. Perdue liquidated his holdings. Analysts attributed the stock’s decline to the company’s announcement, after Mr. Perdue’s sale, that it would acquire assets from Felix Energy.

Though Mr. Perdue has traded many energy stocks while in office, buying and selling dozens of drilling, pipeline, power, and related equipment companies, the transactions that invite special scrutiny are those involving industries that were within his direct oversight through his committee positions.

Mr. Perdue actively traded in First Data, a financial firm based in Atlanta. Like his trading in Devon Energy, Mr. Perdue’s transactions in First Data appear to have been well timed, as reported by The Daily Beast.

After selling his entire stake in First Data in November 2018, Mr. Perdue repurchased shares in the company that December, three weeks before it announced a merger with the financial services technology firm Fiserv on Jan. 16, 2019. Mr. Perdue subsequently reported capital gains of $50,000 to $100,000 in First Data.

Mr. Perdue had received campaign contributions from First Data executives.

During his Senate term, Mr. Perdue has at various times held shares in roughly a dozen banks, ranging in size from JPMorgan Chase, the nation’s largest bank with nearly $2.7 trillion in assets, to the comparatively tiny First Hawaiian Bank.

Regions Financial, a regional lender based in Birmingham, Ala., has been one of Mr. Perdue’s frequent trades. He spent much of his term loading up on the stock, buying shares on 30 occasions.

Mr. Perdue was particularly active in buying Regions in 2017 and early 2018. During that time, he was also pushing to roll back financial regulations that had imposed additional scrutiny and cash constraints on banks with more than $50 billion in assets after the financial crisis. On Sept. 28, 2017, he co-sponsored a Senate bill proposing to soften the regulations governing midsize banks like Regions. A broader bill, which included the same proposal, was approved by the Senate the following March and signed into law by President Trump that May.

Between May 2017, about four months before Mr. Perdue introduced his legislation, and that November, he made more than a dozen purchases of Regions shares. And between Mr. Perdue’s first purchase of Regions stock in 2017 and the time Mr. Trump signed the bill in 2018, the bank’s shares rallied 35 percent.

The chief executive of Regions, John M. Turner Jr., has also contributed to Mr. Perdue’s re-election campaign.

Mr. Perdue’s decision to sell off his stock holdings this past April followed criticism of trades made by several senators in coronavirus-sensitive stocks just after they had attended a Senate briefing on Jan. 24.

In the aftermath of those sales, the Justice Department opened investigations into trading by Ms. Loeffler; Senator Richard M. Burr of North Carolina; his Republican colleague James M. Inhofe of Oklahoma; and Dianne Feinstein, the California Democrat. All have since been closed except the Burr inquiry, which is also nearing an end, according to a person with knowledge of the matter. A Justice Department spokesman declined to comment.

Mr. Perdue, whose office has said he did not attend that briefing, was among those who bought and sold some of those stocks, including Pfizer, in the weeks that followed.

Mr. Perdue purchased up to $260,000 worth of Pfizer stock between Feb. 26 and Feb. 28, in the early days of a market downturn. On the 28th, he issued a news release reporting that he had regularly attended briefings led by the coronavirus task force; records subsequently showed that he had bought the third tranche of Pfizer shares that same day.

The news release also emphasized that the U.S. government was expediting the development of a coronavirus vaccine. And in March, Pfizer announced its partnership with a German biotechnology company, BioNTech, to develop a coronavirus vaccine.

Mr. Perdue had frequently traded Pfizer stock before this year. He had rarely traded another stock he bought in the early stages of the U.S. outbreak, DuPont, which, as a manufacturer of personal protective equipment, also stood to benefit from the coronavirus response. (Mr. Perdue purchased some shares in DuPont on Jan. 24, the day of the Senate briefing, and additional shares later.)

The senator with President Trump at the Centers for Disease Control and Prevention in March.Credit…T.J. Kirkpatrick for The New York Times

In late February and early March, Mr. Perdue sold stock in Caesars, an entertainment company whose casino business would be hard-hit by the pandemic, but purchased shares of Disney and Delta, additions to his portfolio that seem to run counter to any suggestion that he was trading on insider information about the virus.

Midway through April, Mr. Perdue began selling most of his stocks. He moved some of his money into mutual funds and exchange-traded funds, which track baskets of stocks or bonds.

The shift appeared timed to counteract harsh criticism leveled by the senator’s political opponents. But given that President-elect Joseph R. Biden Jr. and a sharply divided Senate are unlikely to favor the energy and financial stocks in which Mr. Perdue was once so active, it may also have been a prescient financial move.

Susan C. Beachy contributed research.

Continue reading the main story

Source

Related posts

Why Are Republicans So Afraid of Voters?

TheEarthLab

Georgia Prosecutors Open Criminal Inquiry Into Trump’s Efforts to Subvert Election

TheEarthLab

Environmental News Network – Studying Interactions Between Ground-Nesting Bees and Soils

TheEarthLab

Leave a Comment