As the devastation of the new coronavirus forced millions of people to 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, the Georgian Republican, the crisis last March signaled something different: a share purchase option.
For the second time in just two months, Perdue’s timing was impeccable. He avoided a sharp loss and made an impressive profit by selling and then buying the same shares: Atlanta-based financial technology company Cardlytics, which once served on the board.
On January 23, when news spread in Congress that the coronavirus posed a serious economic and public health threat, Perdue sold $ 1-5 million worth of $ 86 per share of Cardlytics, according to congressional information.
Weeks later, in March, after the company’s stock plummeted after an unexpected executive shock and lower-than-expected earnings, Perdue repurchased the stock for $ 30 a share, with an investment of between $ 200,000 and $ 500,000.
The value of these shares has now quadrupled, reaching $ 121 per share on Tuesday.
The Cardlytics deals were just a slice of a number of investment decisions Perdue and other senators made in the early days of the pandemic. They sparked outrage after it was revealed that some members of Congress had been informed of the economic and health threat posed by the virus. The transactions were briefly mentioned in the history of Intercept published in May.
Now that Perdue is locked in a re-election battle The course of January 5th, its trades during the public health and economic crisis have become an issue in the already negative, costly campaign that determines which party controls the Senate.
There is no conclusive evidence that Perdue, who is one of the wealthier members of the Senate, acted on the basis of information obtained as a member of Congress or through his long-standing relationship with company officials. It is illegal for non-public information obtained as an insider or member of Congress to be used in making investment decisions.
But according to legal experts, the date of its sale, the fact that it quickly repurchased Cardlytics shares when it lost two-thirds of its market value, and its close ties with company officials all justify control.
“This seems really suspicious,” said John C. Coffee Jr., a professor in law at Columbia University who specializes in corporate and securities issues. But he added, “Conviction requires more than suspicion.”
The Perdue campaign rejected a request for an interview with the senator. Perdue spokesman John Burke said in a statement that the senator had been cleared of the violation, but did not provide details.
“The bipartisan Senate Ethics Committee, the DOJ, and the SEC cleaned Senator Perdue independently and quickly months ago, which was reported,” Burke said.
Perdue’s opponent, Democrat Jon Ossoff, seized his stock trading while trying to brand him a “fraudster”.
Perdue van is not the only senator on the ballot in Georgia. Senator Kelly Loeffler, also a Republican, is running against Democrat Raphael Warnock to fulfill the remainder of the retired Senator Johnny Isakson’s term.
Perdue Cardlytics transactions fit into a broader pattern of stock market movements when the coronavirus first hit the United States
At the time, Perdue publicly stated that the economy was strong and praised President Trump in an Fox News Channel interview on Feb. 24 for “making the biggest economic turnaround in U.S. history.”
The series of quick transactions in his portfolio told a different story, but showed that the senator had dropped shares of some companies while investing in others, such as DuPont Protective Equipment Manufacturer and Pfizer Pharmaceuticals, which were ready to do well during the epidemic.
Perdue previously said that much of his trades are done by outside financial advisors.
However, according to Donna the Great, a professor of law at Indiana University, these types of agreements do not preclude Perdue from directing a consultant to specific transactions. He said members of Congress can avoid questions about their financial stakes by placing them in blind trust, which Perdue did not do.
“All of these issues related to the motivation behind members of Congress and their personal securities trading could be alleviated if Congress passed a law restricting investment,” said Nagy, who specializes in securities law. “Ordinary citizens don’t have to ask members of Congress about their investments.”
The issue was sufficient for the commitment Perdue suddenly sold for $ 3.2-9.4 million in its stock portfolio over a four-day period in mid-April, according to a review of mandatory financial disclosure submitted to the Senate by the Associated Press. He did not sell his shares in Cardlytics.
Nevertheless, Perdue largely avoided the same level of investigation that some of his colleagues faced.
North Carolina Republican Senator Richard Burr has drawn the most attention and he resigned as chairman of the Senate Intelligence Committee Amid an investigation into the sale of shares in excess of $ 1.7 million, which occurred when he privately warned some good-heeled creators about the virus while publicly underestimating the threat.
Cardlytics works at the meeting point of banking and online marketing. It helps financial institutions, including Wells Fargo, run rewards programs, using data collected by banks about customers to sell to them – similar to what Facebook does with targeted ads.
The company did not reply to the request for comments.
After the turmoil in March, its share price rebounded dramatically. Lynne Laube, the current CEO of Cardlytics, says the epidemic has a lot to do with it, which has boosted consumer interest in savings programs.
“I hate to say that this epidemic is playing for our benefit, but it is playing for our benefit,” he said during an income call in May.
Perdue acquired 75,000 Cardlytics shares through stock options offered to serve the company’s board of directors between 2010 and 2014, when he resigned after winning a Senate mandate, according to submissions from the Securities and Exchange Commission. The then-unlisted company also offered him options that will be available in October 2020 and January 2022.
Perdue’s latest financial data does not indicate whether he exercised the options that became available in October.
But Coffee, a law professor at Columbia University, says this is an unusual move for the company.
“I have never seen extended options between 2014 and 2022,” he said. – This is a very long extension.
While Perdue left the company’s board of directors, he maintained contacts with some of his executives, who donated more than $ 30,000 to his political committees. Records show that donations to Perdue account for nearly 80% of the donations made by Cardlytics employees to federal candidates over the past decade.
Meanwhile, Perdue used social media to publicize the company. In August 2016, he toured his office and took photographs with Laube and then-CEO Scott Grimes, which he posted on Facebook. In the fall of 2019, he presented Laube and Grimes at an Atlanta gala where they received a business performance award.
Isakson, who served at Perdue, took steps to avoid Perdue facing him lately. Isakson, a Republican, placed much of his own property in blind trust after some of his assets attracted unwanted attention in 2012.
“I said I have to be as clean and pure as anyone else, and the best way to do that is through blind trust,” said Isakson, who served on the Senate Finance and Ethics Committee, in a 2017 statement to the Atlanta Journal Constitution. “I don’t know what I own.”
