As we posted last week, the FBI was apparently investigating Senators Loeffler, Feinstein, Inhofe and Burr for possible insider trading. Yesterday it announced that it was closing the investigation of all except Burr.
It is important to note that there were probably two investigations going on, one by the FBI and one by the SEC. The SEC's investigations are private, so we won't know about them.
The FBI investigation would be part of a criminal investigation, and given the claims that have been reported in the press by the Senators, it is not much of a surprise that the criminal investigations are closed. There is no word on a pending, or closed SEC investigation.
Feinstein claims her account is in a blind trust, Loeffler claims that her husband was involved in the trades with no involvement by her. Inhofe's trades were reportedly sales of tech companies, not directly coronavirus related, and he claims that he gave instructions in 2018 to his broker to move his portfolio entirely out of stocks and into mutual funds in December 2018. He stated that his adviser has been doing so since then, and he was not aware of or consulted about any transactions.
While Feinstein and Inhofe may have valid defenses, Loeffler's trades are more problematic given the allegation that she sold the same day White House officials briefed her and her Health, Education, Labor and Pensions Committee colleagues about the coronavirus. Her sales, and purchases were coronavirus related, according to press reports.
The fact that the DOJ has shut down a criminal investigation does not mean that the SEC is not investigating. Given the fact that penalties for insider trading from the SEC can be up to three times the profit gained, or loss avoided, that is a significant penalty.
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Mark Astarita is a nationally recognized securities fraud attorney representing investors and financial professionals in a wide variety of arbitration, litigation and investigative matters. He can be reached at 212-509-6544 or by email at mja@sallahlaw.com
