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As 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 plunged to a three-year low.
But for Senator David Perdue, a Republican from Georgia, the crisis of last March signaled something else: a stock opportunity.
And for the second time in less than two months, Perdue’s timing was impeccable. He avoided a brutal loss and reaped an incredible gain by selling and then buying the same stock: Cardlytics, an Atlanta-based fintech company on the board of which he once served.
On January 23, as Congress spread through Congress that the coronavirus was a major threat to the economy and public health, Perdue sold between $ 1 million and $ 5 million of Cardlytics shares at $ 86 per share. , according to congressional revelations.
Weeks later, in March, after the company’s shares fell following an unexpected leadership reshuffle and lower than expected earnings, Perdue bought back the stock for $ 30 a share, investing between 200,000. and $ 500,000.
Those stocks have now quadrupled in value, closing at $ 121 a share on Tuesday.
Cardlytics transactions were just one slice of a large number of investment decisions made early in the pandemic by Perdue and other senators. They sparked public outrage after it became clear that some members of Congress had been made aware of the economic and health threat posed by the virus. The transactions were briefly mentioned in an article published by Intercept in May.
Now that Perdue is locked in a pitched battle for re-election in a January 5, its jobs during a health and economic crisis have become a stake in what has already become a negative and costly campaign that will determine which party controls the Senate.
There is no definitive evidence that Perdue, who is among the wealthiest members of the Senate, acted on the basis of information obtained as a member of Congress or through his long-standing relationships with officials of the Senate. ‘business. It is illegal to use non-public information obtained as a company insider or member of Congress to make investment decisions.
But legal experts say the timing of its sale, the fact that it quickly bought out Cardlytics stock after it had lost two-thirds of its market value, and his close ties to company officials all deserve to be examined.
“It sounds suspicious,” said John C. Coffee Jr., a Columbia University law school professor who specializes in corporate and securities issues. But he added: “It takes more than suspicion to condemn.”
The Perdue campaign declined a request for an interview with the senator. In a statement, Perdue spokesman John Burke said the senator was cleared of his wrongdoing but did not provide details.
“The bipartisan Senate Ethics Committee, DOJ, and SEC all independently and quickly cleared Senator Perdue months ago, which has been reported,” said Burke.
Perdue’s opponent, Democrat Jon Ossoff, took hold of his stock transactions while trying to label him a “crook.”
Lost is not the only senator on the ballot in Georgia. Senator Kelly Loeffler, also a Republican, is running against Democrat Raphael Warnock in an attempt to complete the remainder of the term of retired Senator Johnny Isakson.
Perdue’s Cardlytics transactions are part of a larger pattern of stock moves he made when the coronavirus first hit the United States
At the time, Perdue publicly maintained that the economy was strong and praised President Trump in a Fox News Channel interview on February 24 for “carrying out the greatest economic turnaround in US history.” .
A series of quick transactions in his wallet, however, told a different story, showing that the senator had given up some shares in the company, while investing in others – like protective equipment maker DuPont and pharmaceutical company Pfizer – that were poised to perform well during the pandemic.
Perdue has previously said that outside financial advisers do most of its transactions.
But Donna Nagy, a law professor at Indiana University, said this type of arrangement didn’t stop Perdue from asking an advisor to make specific transactions. She said one way for members of Congress to avoid questions about their financial holdings is to place them in blind trust, which Perdue did not do.
“All of these questions about the motives of our members of Congress and their personal securities transactions could be alleviated if Congress passed a law restricting investments,” said Nagy, a securities law specialist. “Ordinary citizens shouldn’t have to ask members of Congress about their investments.”
The problem was enough liability for Perdue to abruptly sell between $ 3.2 million and $ 9.4 million of its stock portfolio over a four-day period in mid-April, according to a review by the Associated Press on the mandatory financial disclosures he submitted to the Senate. He did not sell his stock of Cardlytics.
Still, Perdue has largely avoided the same degree of scrutiny some of her colleagues face.
Republican Senator Richard Burr of North Carolina has attracted the most attention and resigned as chairman of the Senate Intelligence Committee amid an investigation into his sale of more than $ 1.7 million in stock, which came when he privately warned some well-heeled voters 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 banks have collected on their customers to market them, like what Facebook does with targeted ads.
The company did not respond to a request for comment.
After the March crisis, its share price rebounded dramatically. Lynne Laube, current CEO of Cardlytics, said the pandemic had a lot to see, sparking consumer interest in savings programs.
“I hate to say this pandemic is working in our favor, but it is in our favor,” she said on a call for results in May.
Perdue acquired 75,000 shares of Cardlytics through stock options offered for his service to the company’s board of directors from 2010 to 2014, when he resigned after winning his Senate seat, according to documents filed by the Securities and Exchange Commission. The company, which at the time had not yet gone public, also offered it options that would become available in October 2020 and January 2022.
Perdue’s latest financial information does not indicate whether he exercised the options that became available in October.
But according to Coffee, a law professor at Columbia University, it’s an unusual move by the company.
“I have never seen options extended from 2014 to 2022,” he said. “It’s a very long extension.”
While Perdue left the company’s board of directors, he maintained ties with some of its executives, who have donated more than $ 30,000 to its political committees. Donations made to Perdue account for nearly 80% of all donations to federal candidates by Cardlytics employees over the past decade, according to records.
Perdue, meanwhile, used social media to promote the company. In August 2016, he visited his office and posed for a photo with Laube and then-CEO Scott Grimes, which he posted on Facebook. In the fall of 2019, he presented Laube and Grimes at a gala in Atlanta, where they received an award for business excellence.
Isakson, who served with Perdue, has taken steps to avoid the kind of scrutiny Perdue now faces. Isakson, a Republican, placed most of his own holdings in a blind trust after some of his assets attracted unwanted attention in 2012.
“I said I had to be as blatantly clean and blatantly clean as anyone, and the best way to achieve that is blind trust,” said Isakson, who has served on the Senate finance and ethics committees, at the Atlanta Journal Constitution in 2017. I don’t know what I own. “
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