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


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

By January of that year, while the public was largely unaware of the scale and severity of the threat posed by the virus, US government agencies were mobilizing for a public health nightmare. Many of the officials behind these efforts also made timely trades in industries that could either win or lose heavily from the pandemic, according to the report.

“Nearly 400 employees across 50 agencies reported owning shares in airlines, resorts, hotels, restaurants and cruises in early 2020,” the paper wrote. It also cited about 240 employees who owned between $9 million and $28 million in shares of drug, manufacturing and biotechnology companies that ended up winning federal contracts related to Covid-19.

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

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

Federal officials are barred from working on matters in which they have a personal financial interest and may not trade in non-public information acquired on the job. They must disclose their financial assets and transactions every year.

The Journal said most agencies’ ethics rules focus on the types of stocks employees can trade, not when they can trade.

In a case highlighted by the Journal, a high-ranking official at the National Institutes of Health reported that he sold $15,001 to $50,000 of an equity mutual fund on Jan. his department’s status as “novel coronavirus all the time.”

That official, Hugh Auchincloss, the principal deputy director of the NIH’s National Institute of Allergy and Infectious Diseases and one of Anthony Fauci’s top representatives, didn’t stop there. A few days later, when alarm over the virus appeared to be growing within the federal government, Auchincloss made six mutual fund sales totaling between $111,006 and $315,000 in value.

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

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

The National Institute of Allergy and Infectious Diseases told the WSJ that financial disclosures are routinely reviewed by NIH ethics officials to ensure compliance with reporting requirements and resolve potential conflicts of interest. He declined to say whether Auchincloss did the business himself or had a managed account, according to the paper.

In another case of potential conflicts flagged by the Journal, former Transport Secretary Elaine Chao reportedly bought more than $600,000 in two equity funds in March 2020. At the time, her agency was involved in the pandemic response and her husband, Senator Mitch McConnell, “was leading negotiations on a giant, market-boosting stimulus bill,” the Journal wrote.

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A Department of Transportation spokesperson did not immediately comment.

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

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

— Katherine Dillinger, Hannah Rabinowitz, and Holmes Lybrand of CNN contributed to this article.

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