US officials traded gains in stocks as they braced for Covid-19, the WSJ reported


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Dozens of federal officials traded stocks and mutual funds in early 2020 as the government prepared for the onslaught of Covid-19, according to a Wall Street Journal investigation.

By January of that year, while the public was unaware of the scale and severity of the threat posed by the virus, US government agencies were mobilizing for a public health nightmare. According to the report, many of the officials behind these efforts also made good-time trades in industries that either gained or lost dramatically from the pandemic.

“Nearly 400 officials from 50 agencies reported owning shares in airlines, resorts, hotels, restaurants and cruise lines as of early 2020,” the Journal wrote. He also cited 240 officials with between $9 million and $28 million in stocks of drug, manufacturing and biotech companies that eventually won federal contracts related to Covid-19.

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

In that crucial month of pandemic preparation, officials at the Department of Health and Human Services made far more sales than in previous months, the Journal reported. Their trading activity was 60% higher in January 2020 compared to the monthly average in 2019.

Federal officials are prohibited from working on matters that have a personal financial stake, and are prohibited from trading on non-public information acquired on the job. They must disclose their financial assets and operations every year.

The Journal said most agency ethics rules focus on the types of actions officials can trade, not when they can trade.

In one case highlighted by the Journal, a top official at the National Institutes of Health said he sold between $15,001 and $50,000 of a stock fund on Jan. 24 — the same day he sent an email describing his department’s situation as the “new coronavirus.” all the time.”

That official, Hugh Auchincloss, senior deputy director of 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, when alarm about the virus seemed to be growing in the federal government, Auchincloss made six sales ranging from $111,006 to $315,000.

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

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

The National Institute of Allergy and Infectious Diseases told the WSJ that NIH ethics officials regularly review financial disclosures to ensure compliance with reporting requirements and resolve potential conflicts of interest. According to the Journal, Auchincloss declined to say whether he made the transactions himself or whether he had a managed account.

In another case of potential conflicts reported by the Journal, former Transportation Secretary Elaine Chao allegedly bought more than $600,000 in two stock funds in March 2020. At the time, her agency and her husband, Senator Mitch McConnell, were involved in the pandemic response. , “was leading negotiations on a massive stimulus bill to boost the market,” the Journal wrote.

A spokesman for the Department of Transportation had no immediate comment.

CNN previously reported that Senator Richard Burr avoided losses of about $87,000 when he sold stocks at the start of the Covid-19 pandemic, according to a search warrant unsealed in September.

Investigators said in the warrant that because of his position in Congress, the North Carolina Republican knew about the threat of Covid-19 in February, before public concern about the severe economic impact of the pandemic increased. The Justice Department launched an insider trading investigation into Burr, which ultimately ended without criminal charges.

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