Insider-Traders Used to Go to Prison

by Pa Rock
Citizen Journalist

Celebrities haven't always been immune from the law.  Back in 2001 television personality and cultural icon Martha Stewart was reportedly among several people who received private information that a US drug company in which they had invested was about to be turned down by the FDA for a patent on a new drug.  Stewart quickly sold 4,000 shares of the company and netted a profit of $45,000.    The price of the stock dropped sharply a few days later after news of the FDA patent rejection was announced.  Three years after that, in 2004, Stewart was sentenced to five months in prison for crimes related to insider-trading -  and fined $195,000.

Martha Stewart served her time scrubbing floors and cleaning toilets in a women's prison in West Virginia, and then re-entered society where she was able to slowly regain her business and celebrity status.

On January 25th of this year, several members of the United States Senate were briefed in private on the impending COVID-19 pandemic that was about to hit the United States.  Immediately after that briefing, four Republican senators and one Democrat began making stock transactions that appear to have been based on the information that they received in that briefing.  To wit, it looked as though they were trading stocks based on insider information, or, what is known as "insider-trading."

Those five senators - Burr (R-NC), Perdue (R-GA), Loeffler (R-GA), Inhofe (R-OK), and Feinstein (D-CA) - all indignantly proclaimed their innocence, with most saying that other people routinely made all of their transactions for them without any personal input from the senators.  Most expressed a desire for their friends on the Senate Ethics committee to investigate their alleged indiscretions, but William Barr's Justice Department stepped in and took the lead in the inquiries.

Senator Burr, who appeared to have been personally involved in 33 stock transactions immediately after he was briefed on the pandemic, received most of the bad press during the heyday of the scandal.  The FBI seized his cell phone, and Fox "News" pundit Tucker Carlson went on-air and called for Burr's resignation from the Senate.  As a result of the stock crisis, Burr stepped down, at least temporarily, from his chairmanship of the Senate Intelligence Committee, and he had already announced his intention not to run for re-election to the Senate in 2022.

(To Richard Burr's credit, insider-trading in Congress did not become illegal until the passage of the STOCK - Stop Trading on Congressional Knowledge - Act of 2012, and Burr was one of three US Senators to vote against that act - so he was not being hypocritical, at least in that sense.)

In May William Barr's Department of Justice closed out its inquiries into Loeffler, Inhofe, and Feinstein without action, a move that Loeffler and Inhofe went on to refer to as "a complete exoneration," even though the matter was simply dropped.  The Justice Department also eventually declined to press charges against Perdue.  The matter against Richard Burr is still pending.

No member of the Senate has been officially charged with insider-trading or related crimes.  No fines have been paid and no time has been served.   Martha Stewart paid for her crimes with a big fine, time behind bars, and a serious blow to her professional reputation.  She admitted her mistakes and got on with her life.    America can once again respect Martha Stewart.

Perhaps one day we will be able to respect our political class as well, but that day is not here yet.