US officials made lucrative stock trades while preparing for Covid-19, WSJ reports

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According to a Wall Street Journal investigation, dozens of federal officials made lucrative stock and mutual fund deals in early 2020 as the government braced for the Covid-19 onslaught.

While the public was largely unaware of the scale and seriousness of the virus threat this January, US government agencies were mobilizing for a public health nightmare. Many of the officials behind those efforts also made well-timed trades in industries that would gain or lose heavily from the pandemic, according to the report.

“Nearly 400 officials at 50 agencies said they owned stocks in airlines, resorts, hotels, restaurants and cruise lines as of early 2020,” the Journal wrote. It also cited around 240 officials who owned between $9 million and $28 million in stock in drug, manufacturing and biotech companies that eventually won federal contracts related to Covid-19.

The WSJ report was based on financial disclosure forms for approximately 12,000 government officials between 2016 and 2021. CNN has not independently verified the reporting.

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In this crucial month of pandemic preparations, Department of Health and Human Services officials sold far more stocks than in previous months, the Journal reported. Their trading activity in January 2020 was 60% higher than the monthly average of 2019.

Federal officials may not work on matters in which they have a personal financial interest, and they may not trade in nonpublic information acquired on the job. They must disclose their financial assets and transactions every year.

According to the Journal, most agencies’ ethics rules focus on the types of stocks officials can trade, not when they can trade.

In one case highlighted by the Journal, a senior official at the National Institutes of Health reported that he sold a stock mutual fund valued at between $15,001 and $50,000 on Jan. 24 — the same day he emailed, in describing the condition of his department as “new coronavirus” all along.”

That official, Hugh Auchincloss, senior associate director at the NIH’s National Institute of Allergy and Infectious Diseases and one of Anthony Fauci’s top deputies, didn’t stop there. A few days later, as concerns about the virus seemed to be growing within the federal government, Auchincloss made six mutual fund sales totaling between $111,006 and $315,000.

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All of these stocks would soon fall sharply in the market downturn that took root as Wall Street and the public began to worry about the spread of the virus.

Auchincloss did not respond to requests for comment from the Journal, and his office did not immediately respond to a request for comment from CNN.

The National Institute of Allergy and Infectious Diseases informed the WSJ that financial disclosures are routinely reviewed by NIH ethics officers to ensure compliance with reporting requirements and to resolve potential conflicts of interest. It declined to say whether Auchincloss made the trades himself or had a managed account, according to the Journal.

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In another case of potential conflict reported by the Journal, former Secretary of Transportation Elaine Chao reportedly bought two equity funds worth more than $600,000 in March 2020. At the time, her agency and her husband, Senator Mitch McConnell, were involved in the pandemic response, “negotiating a huge, market-boosting stimulus package,” the Journal wrote.

A spokesman for the Ministry of Transport initially did not comment.

CNN previously reported that Senator Richard Burr avoided about $87,000 in losses selling shares early in the Covid-19 pandemic, according to an affidavit unsealed by a search warrant in September.

Investigators said in the warrant that the North Carolina Republican knew about the Covid-19 threat because of his position in Congress in February — before public concerns grew about the serious economic impact of the pandemic. The Justice Department launched an insider trading investigation into Burr, which eventually ended without charge.

– CNN’s Katherine Dillinger, Hannah Rabinowitz, and Holmes Lybrand contributed to this article.


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