WASHINGTON (AP) – Like the ravages of the new coronavirus forced millions of people out of work, closed businesses and reduced the value of retirement accounts, the Dow Jones Industrial Average fell to a three-year low.
But for Senator David Perdue, a Republican from Georgia, the crisis in 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 huge profit by selling and then buying the same stock: Cardlytics, an Atlanta-based financial technology company whose board of directors he once served.
On January 23, as word spread through Congress that coronavirus posed a major economic and public health threat, Perdue sold $ 1
Weeks later, in March, after the company’s stock plunged further after an unexpected management shake-up and lower-than-expected earnings, Perdue bought the stock back for $ 30 a share. Stock and invested between $ 200,000 and $ 500,000.
These shares have now quadrupled in value and closed at $ 121 per share. Share Tuesday.
The cardlytics transactions were just a piece of a large number of investment decisions made in the early days of the pandemic by Perdue and other senators. They touched on public outrage after it became clear that some members of Congress had been briefed on the economic and health threat posed by the virus. The transactions were mentioned briefly in a story published by Intercept in May.
Now that Perdue is locked in a fight for re-election in a runoff on January 5th, his actions during a public health and economic crisis has become a problem in what has already become a negative, expensive campaign that will determine which party governs the Senate.
There is no evidence that Perdue, who is among the wealthier members of the Senate, acted on information obtained as a member of Congress or through his many years of relationship with company officials. It is illegal to use non-public information obtained as a business 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 shares back as it had lost two-thirds of its market value, and his close ties to company officials warrant control.
“This seems suspicious,” said John C. Coffee Jr., a professor at Columbia University Law School who specializes in corporate and securities issues. But he added: “You need more than suspicion to judge.”
The Perdue campaign rejected a request for an interview with the senator. In a statement, Perdue spokesman John Burke said the senator had been cleared of misconduct but did not provide details.
“The Parliamentary Ethics Committee of the Senate, DOJ and SEC all cleared independently and quickly Senator Perdue months ago, as was reported,” Burke said.
Perdue’s opponent, Democrat Jon Ossoff, has taken up his stock trading while trying to label him a “villain”.
Perdue is not the only senator on the ballot in Georgia. The latest Kelly Loeffler, also a Republican, is running against Democrat Raphael Warnock in an attempt to complete the rest of retired Senator Johnny Isakson’s term.
Perdue’s Cardlytics transactions fit into a broader pattern of stock movements he made when coronavirus first hit the United States
At the time, Perdue publicly maintained that the economy was strong, praising President Donald Trump during a Feb. 24 interview on the Fox News Channel for “carrying out the biggest economic turn in U.S. history.”
However, a series of quick transactions in his portfolio told a different story, however, which showed that the senator dumped some company shares while investing in others – such as the manufacturer of protective equipment DuPont and the pharmaceutical company Pfizer – who were ready to do well during the pandemic .
Perdue has previously said that external financial advisers make most of his trades.
But Donna Nagy, a law professor at Indiana University, said this type of arrangement does not preclude Perdue from instructing an advisor to make specific transactions. She said one way for members of Congress to avoid questions about their financial possessions is to put them in a blind trust, which Perdue has not done.
“All of these questions about the motivation behind our members of Congress and their personal securities trading could be alleviated if Congress passed a law restricting investment,” said Nagy, who specializes in securities. “Ordinary citizens should not have to ask members of Congress about their investments.”
The question was enough of a commitment that Perdue suddenly sold between $ 3.2 million and $ 9.4 million of its stock portfolio over a four-day period in mid-April, according to an Associated Press review of mandatory financial information which he has submitted to the Senate. He did not sell his stock in Cardlytics.
Yet Perdue has largely avoided the same degree of control that some of his colleagues face.
Republican Senator Richard Burr of North Carolina attracted the most attention and resigned as chairman of the Senate Intelligence Committee amid a probe into his sale of up to $ 1.7 million in stock, which came as he privately warned some well-heeled constituents about the virus while publicly downplaying the threat.
Cardlytics works at the intersection of banking and online marketing. It helps run rewards programs for financial institutions, including Wells Fargo, using data that banks have gathered about their customers to market them – similar to what Facebook does with targeted ads.
The company did not respond to a request for comment.
After the turmoil in March, the stock price rose dramatically. Lynne Laube, Cardlytics’ current CEO, said the pandemic had a lot to do with it, leading to consumer interest in savings programs.
“I hate to say that this pandemic is playing in our favor, but it’s playing in our favor,” she said during an earnings call in May.
Perdue acquired 75,000 shares in Cardlytics through stock options offered to his service on the company’s board from 2010 to 2014, when he resigned after winning his Senate seat, Securities and Exchange Commission filing shows. The company, which at the time had not yet been announced, also offered him options that would become available in October 2020 and January 2022.
Perdue’s latest financial information does not indicate whether he has exercised the options that became available in October.
But according to Coffee, Columbia University Law Professor, it’s an unusual move from the company.
“I have never seen opportunities expand from 2014 to 2022,” he said. “It’s a very long extension.”
While Perdue left the company’s board, he has maintained ties with some of its executives, who have donated more than $ 30,000 to his political committee. Donations to Perdue account for nearly 80% of everything given to federal candidates by Cardlytics employees over the past decade, records show.
Meanwhile, Perdue has used social media to publicize the company. In August 2016, he took a tour of his office and posted a picture with Laube and then-CEO Scott Grimes, which he posted to Facebook. In the fall of 2019, he introduced Laube and Grimes at a gala in Atlanta, where they received a business performance award.
Isakson, who served with Perdue, took steps to avoid the type of control that Perdue now faces. Isakson, a Republican, put most of his own holdings in a blind trust after some of his assets attracted unwanted attention in 2012.
“I said I should be as blatantly clean and blatantly clean as anyone, and the best way to do that is blind trust,” Isakson, a member of the Senate Finance and Ethics Committees, told the Atlanta Journal Constitution in 2017. . ”I do not know what I own. ”