CEOs Quitting, Politicians Selling Shares In Record Numbers Prior To Stock Market Collapse
CEOs are departing in droves. Also, America’s corporate insiders along with politicians dumped shares at record levels. Bad news for the stock market. CEOs Quitting, Politicians Selling Shares In Record Numbers Prior To Stock Market Collapse
* CEOs Are Departing In Droves.
* America’s Corporate Insiders, Which Include Chief Executives, Dumped Company Shares At Record Levels.
* One Wall Street Firm Is Projecting A Stagnant Year For U.S. Companies.
The stock market is in trouble. The Dow Jones Industrial Average printed its worst one-day point drop in history after plunging 1,191 points Thursday. The S&P 500 is also making history. Over the last six days, the index tumbled by 10% from the all-time high at a pace never seen before.
Numerous Senators In The Trump Adminstration Dumped Millions In Stock Weeks Before Coronavirus Pandemic Hit US!!!
Burr, Senate Colleagues Sold Stock After Coronavirus Briefings
Multiple members of Congress and spouses made sales that saved them from losses before markets slid.
Weeks before the new coronavirus pandemic sent the stock market plummeting, several members of Congress, their spouses and investment advisers each sold hundreds of thousands of dollars in stock after lawmakers attended sensitive, closed-door briefings about the threat of the disease.
Some of the well-timed sales saved the senators and their spouses as much as hundreds of thousands of dollars in potential losses, a Wall Street Journal analysis of the trades shows.
Sen. Richard Burr, a top Republican from North Carolina who sits on two committees that received detailed briefings on the growing epidemic, reported in disclosure reports that he and his wife on Feb. 13 sold shares of companies worth as much as $1.7 million.
The Journal analysis shows that the shares sold by the Burrs were worth—at minimum—$250,000 less at the close of trading on March 19 than they were when the senator and his wife sold them. Mr. Burr said in a statement that he relied upon “public news reports to guide my decisions regarding the sale of stocks.”
Mr. Burr quickly drew criticism after his stock sales were reported Thursday evening by ProPublica and the Center for Responsive Politics. Fox News host Tucker Carlson called for Mr. Burr to resign, as did a handful of Democratic House members and the North Carolina Democratic Party.
On Friday morning, Mr. Burr said he “understands the assumption that many could make in hindsight” and asked the Senate Ethics Committee chairman “to open a complete review of the matter with full transparency.”
While some market analysts were warning at the time of the potential damage the emerging coronavirus could cause to the stock market, the sales also came at a time when President Trump and some Republican politicians were playing down the potential harm from the epidemic.
Other senators who were actively trading before the spreading infectious disease caused the markets to fall were Republican Senators Kelly Loeffler and David Perdue of Georgia, and James Inhofe of Oklahoma. The husband of Sen. Dianne Feinstein, the California Democrat, also sold stock before the market downturn.
Ms. Loeffler and Ms. Feinstein, who are both married to investment professionals, said they had been unaware of the trades because they are handled by advisers. Mr. Perdue said his portfolio is managed by an investment adviser who regularly makes dozens of trades and was buying as well as selling shares of companies at the time. Mr. Inhofe in a statement said he also has an investment adviser and doesn’t manage trades.
Mr. Burr, chairman of the Senate Intelligence Committee, which has been receiving frequent briefings on the spread of Covid-19 since it emerged in China, made 33 stock trades on Feb. 13 worth between $628,000 and $1.7 million, according to the filings. Congressional rules require that trades be reported in ranges, not precise figures.
Mr. Burr, who is regarded as the Senate’s leading authority on pandemics as the author of the 2006 Pandemic and All-Hazards Preparedness Act, is also on the Senate health committee, which was briefed on the coronavirus on Jan. 24.
Three of Mr. Burr’s sales were in hotel company stocks—Park Hotels and Resorts Inc., Wyndham Hotels & Resorts Inc. and Extended Stay America Inc. —which have seen their value drop 74%, 63% and 50%, respectively, since Mr. Burr made the sales.
Mr. Burr and his wife also sold between $96,000 and $265,000 in stock between Jan. 31 and Feb. 4, the filings show, including additional shares of Extended Stay.
In an opinion piece published on Fox News online, Mr. Burr said, “Thankfully, the United States today is better prepared than ever before to face emerging public health threats, like the coronavirus.”
Behind closed doors, in a meeting with a small group of constituents in Washington, Mr. Burr warned them to prepare for dire economic effects of the coronavirus, according to a recording obtained by NPR. On Twitter, Mr. Burr called that report a “tabloid-style hit piece.”
On Friday, Mr. Burr explained his trades were motivated by news reports. “Specifically, I closely followed CNBC’s daily health and science reporting out of its Asia bureaus at the time,” he said.
Sales were also reported by two other members of the Intelligence Committee, Mr. Inhofe and Ms. Feinstein.
Between Jan. 27 and Feb. 20, Mr. Inhofe sold between $230,000 and $500,000 of stock in several companies, including Brookfield Asset Management, a real-estate company.
Mr. Inhofe in a statement said that his investment adviser has been moving him out of stocks and into mutual funds after he took the chairmanship of the Senate Armed Services Committee in December 2018 “to avoid any appearance of controversy.
Richard Blum, the husband of Ms. Feinstein and a professional investment manager, sold shares of Allogene Therapeutics Inc., a biotech company, on Jan. 31 and Feb. 18 in amounts between $1.5 million and $6 million.
Ms. Feinstein’s spokesman said the senator wasn’t involved in the sales. “All of Senator Feinstein’s assets are in a blind trust, as they have been since she came to the Senate. She has no involvement in any of her husband’s financial decisions,” her spokesman, Tom Mentzer, said in an email.
Matthew Sanderson, a political ethics attorney for Caplin & Drysdale, said he advises his congressional clients either to invest in mutual funds and 401(k)s, or turn investments over to an adviser with a regime to separate the lawmaker for the decision-making.
Mr. Burr’s statement that he acted based upon what he heard from the news media, and not what he learned as a committee chairman, could land him in hot water, Mr. Sanderson said. “That’s pretty weak tea, as for defenses,” Mr. Sanderson said. “That really doesn’t pass muster.”
In 2012, President Obama signed the Stop Trading on Congressional Knowledge Act to outlaw members of Congress and other government employees from engaging in insider trading based on information learned through their jobs.
The public interest group Common Cause filed complaints asking the Justice Department, the Securities and Exchange Commission and the Senate Ethics Committee to investigate the trades of Sens. Burr, Feinstein, Loeffler and Inhofe for possible violations of the law. A Common Cause spokesman said the group’s lawyers had just learned of Mr. Perdue’s trades and were considering adding him to the complaint.
Ms. Loeffler also sits on the Senate’s health committee, which had a closed-door briefing on Jan. 24 about the virus with presentations from the leading U.S. public-health officials, including Dr. Anthony Fauci, the top infectious-diseases specialist in government.
That day, Ms. Loeffler reported, she and her husband began making more than two dozen transactions, primarily selling millions of dollars in companies, including retailers AutoZone Inc. and Ross Stores Inc. They sold between $1.28 million and $3.1 million in stock.
By selling stock when they did, Ms. Loeffler and her husband avoided at least $480,000 in losses as of market close on March 19. The couple also purchased two stocks in February, one of which rose in value despite the market crash. Citrix Systems Inc., which makes remote computing software, rose nearly 3% value since the couple bought shares on Feb. 14.
Meanwhile, Mr. Inhofe and Mr. Perdue traded smaller amounts and avoided at least $63,000 in losses and $43,000 in losses, respectively, since late January. The stocks Mr. Perdue purchased fell similarly in value.
Ms. Loeffler said neither she nor her husband make her own day-to-day decisions on purchases and sales. She said didn’t learn about these transactions until three weeks after they were made. “This is a ridiculous & baseless attack,” Ms. Loeffler said on Twitter.
Ms. Loeffler’s husband, Jeffrey Sprecher, is the chairman of the New York Stock Exchange.
Ms. Loeffler was appointed to her seat in December after Sen. Johnny Isakson resigned for health reasons and is locked in a fierce intraparty battle for a Senate seat in Georgia. Her primary rival, Rep. Doug Collins, criticized the senator. “It’s a sad situation,” Mr. Collins said.
The stock sales of Ms. Loeffler and Mr. Sprecher were reported earlier by the Daily Beast.
The stock market is cratering and corporate America’s chief executives have been a step ahead of the disaster. Many have been dumping shares prior to the correction. On top of that, top honchos of big U.S. companies are leaving their posts in record numbers. These signs indicate that the longest bull market in history may be over.
Corporate Captains Are Abandoning Ship
Chief executives of top companies in the U.S. are leaving their posts at a pace not seen in nearly two decades. Challenger, Gray, and Christmas reported that 1,480 CEOs departed in 2019. This caught the attention of some analysts as C-level executives don’t often step aside while both the economy and the stock market are booming.
The trend continued in January 2020 with 219 chief executives calling it quits. The number represents the highest CEO departures on a monthly basis since 2008. Are they getting out while the getting is good?
When CEOs vacate their positions while the stock market is trading at record highs, it can be a sign that the business cycle has peaked. Massive insider selling of shares adds weight to this theory.
Financial Times reported that corporate insiders, such as chief executives and chief financial officers, sold an estimated $26 billion worth of shares in 2019. This puts insider selling at the highest level since 2000 when corporate insiders sold $37 billion worth of stock in the midst of the dotcom bubble.
Jeff Bezos alone sold $4 billion worth of Amazon stock in a week. Meanwhile, Warren Buffett has been patiently sitting on a cash pile worth $130 billion. The writings on the wall suggest we may be witnessing the beginning of the end of the longest bull market in history.
Earnings Growth for U.S. Companies Will Be Flat This Year
To add fuel to the fire, one Wall Street firm estimates that 2020 will be a stagnant year for U.S. companies. Goldman Sachs revised its earnings estimates for 2020 to $165 per share from $174 per share. The change represents 0% growth for the year.
The multinational investment bank expects coronavirus to shock both supply and demand in China and the United States. In a note to clients, Goldman equity strategist David Kostin wrote,
“We have updated our earnings model to incorporate the likelihood that the virus becomes widespread.”
“Our reduced proﬁt forecasts reﬂect the severe decline in Chinese economic activity in 1Q, lower end-demand for US exporters, disruption to the supply chain for many US ﬁrms, a slowdown in US economic activity, and elevated business uncertainty.”
Once again, it appears that many chief executives are a step ahead of a disaster. The captains of corporate America are fleeing like rats on a sinking ship while dumping shares in record numbers. The best days of the longest bull market in history may be over.
Former Bakkt CEO To Sell All Holdings After Insider Trading Accusations
Following major accusations of insider stock trading during the coronavirus-induced market crash, Senator Kelly Loeffler (R-GA), the former CEO of Bakkt, is liquidating her holdings along with her husband.
In an April 8 tweet, Loeffler said that she and her husband Jeffrey Sprecher, CEO of ICE, which is the company that owns Bitcoin (BTC) options contracts regulator Bakkt, are liquidating their holdings in managed accounts to focus on tackling the coronavirus situation.
“I’m Doing It Because The Issue Isn’t Worth The Distraction”
The former CEO of Bakkt has also published an opinion piece in the Wall Street Journal, emphasizing that her action is not caused by Senate requirements but rather a strong commitment to defeat the coronavirus.
Loeffler Added That She Will Report All Transactions In The Public Periodic Transaction Report:
“I am taking action to move beyond the distraction and put the focus back on the essential work we must all do to defeat the coronavirus. Although Senate ethics rules don’t require it, my husband and I are liquidating our holdings in managed accounts and moving into exchange-traded funds and mutual funds. I will report these exiting transactions in the periodic transaction report I file later this month.”
Accusations Of A Coronavirus Insider Trading Scandal
As reported by Cointelegraph, Loeffler came under fire on March 20, with reports claiming that she sold millions in stock within days of a private Senate Health Committee hearing on the novel coronavirus.
American political commentator Keith Boykin explicitly accused Loeffler of being involved in a “coronavirus insider trading scandal” alongside other Senators including Richard Burr, Jim Inhofe and Ron Johnson.
Loeffler rejected the accusations of improper trading, claiming that she is not directly involved in decisions regarding her portfolio. As reported, the former Bakkt CEO explained that a third party person or set of advisors is tasked with making those decisions.
Loeffler Was Delaying Her Financial Disclosure After Swearing Into The Senate
Loeffler was sworn into the United States Senate on Jan. 6, 2020 after serving as CEO of digital asset exchange Bakkt for about a year.
After taking her seat in the Senate, Loeffler was reportedly delaying her Financial Disclosure Report. The report is a basic requirement for all officials that reveals potential conflicts of interest by identifying asset holdings.
Former Bakkt CEO Hands Documents To DoJ Amid Insider Trading Controversy
Former Bakkt CEO Kelly Loeffler sent documentation concerning her stock trades to the Justice Department amid insider trading accusations.
The former chief executive officer of both Bakkt and the New York Stock Exchange’s parent company Intercontinental, U.S. Senator Kelly Loeffler, has handed over documentation concerning her trading activities to the U.S. Justice Department, or DoJ, the Securities and Exchange Commission (SEC), and the Senate Ethics Committee.
Loeffler is seeking to quell widespread accusations of improper trading, after the third party managing Loeffler and her partner’s portfolio offloaded millions in shares shortly after the senator attended a closed-door senate hearing on coronavirus in January.
In a statement issued on May 14, Loeffler claimed that the documents evidence that both her and her husband, Jeffrey Sprecher, chairman of the New York Stock Exchange, “acted entirely appropriately and observed both the letter and the spirit of the law.”
Senator Loeffler Relinquishes Trading Documents
Since operating Intercontinental Exchange and the New York Stock Exchange, decisions surrounding Loeffler and Sprecher’s portfolios have purportedly been made by “multiple third-party advisors” without input from either individual.
“The documents and information demonstrated her and her husband’s lack of involvement in their managed accounts, as well the details of those accounts,” Loeffler’s statement said.
The accusations stem from 27 stock sales that were executed on Loeffler and Sprecher’s behalf during February — a period through which Loeffler consistently expressed confidence in the U.S. economy, despite her enormous sell-off amid the worsening coronavirus pandemic.
The pair also made a number of six-figure investments into Citrix — a firm selling technological solutions for distributed workplaces.
Richard Burr Under FBI Investigation For Improper Trading
The move follows reports detailing a probe launched by the Federal Bureau of Investigation, or FBI, into republican senator, Richard Burr, regarding stock trades that he made following the same hearing. Senator Burr has handed his phone to investigators and was served a search warrant at his address.
Loeffler has repeatedly declined to answer questions regarding whether she has been contacted by the FBI regarding her or her husband’s trades.
The FBI has also contacted democratic Senator Dianne Feinstein concerning stock transactions made by her husband.
NBA Star Wants Fans To Buy His Contract For $24.6M… Because Bitcoin?
Spencer Dinwiddie has launched a crowdfunding campaign in a bid to sell his NBA contract to his fans for the cash equivalent of 2,625.8 BTC.
The latest development in pro basketballer Spencer Dinwiddie’s efforts to tokenize his NBA contract has seen the star launch a Gofundme campaign in an attempt to raise the cash equivalent of the 2,625.8 Bitcoins (BTC) — worth roughly $24.6M at time of writing.
Dinwiddie launched the campaign, oddly titled ‘Dinwiddie X BTC X NBA’, to purportedly affirm his “commitment to [his] previous tweets” that offered his fans the opportunity to choose which NBA team he would go to in exchange for the value of his contract in Bitcoin.
Dinwiddie Abandons Crypto Campaign, Wants Cash Instead
However, the new campaign is requesting the cash equivalent of the BTC he previously asked for — giving the $24.63 million fundraiser little relation to Bitcoin.
If unsuccessful, Dinwiddie claims that 100% of the money raised will be designated to an undisclosed charity.
Since launching the campaign roughly 11 hours ago, Dinwiddie’s bizarre fundraiser has raised $690 from 65 donors.
Sporting Organizations Tokenize Athletes
During September 2019, Dinwiddie first announced his intention to tokenize his then-reported $34 million NBA contract extension — however, the offer was framed as an opportunity for investors to receive principal and interest.
While many sporting organizations have sought to establish partnerships with crypto firms to offer gamified tokenized representations of stars to fans in recent months, few initiatives appear to have taken off.
Last month, billionaire investor and owner of the NBA’s Dallas Mavericks, Mark Cuban, revealed that since relaunching Bitcoin as an option for fans to purchase tickets and merchandise in August 2019, the team has taken in a measly $130 in BTC.
Nominee To Financial Regulator CFTC Traded Stocks, Options While In Government
Robert Bowes, a housing official, bought options in cruise-ship operator, shares of in-flight internet company.
President Trump’s nominee to the agency that regulates the vast derivatives market is no stranger to risky bets.
Robert Bowes, a political appointee in the Department of Housing and Urban Development, has reported 140 trades of stocks and options that collectively amount to between $671,000 and $3.2 million since joining the government in early 2017. Three bets on options or individual stocks were larger than $50,000 each.
Disclosure forms filed by Mr. Bowes, a former banker and fund manager nominated by Mr. Trump to the Commodity Futures Trading Commission, list wagers against cruise operator Royal Caribbean Group, bets on market volatility and purchases of small-cap stocks.
Ethics rules don’t ban government officials from trading, as long as they steer clear of conflicts of interest and don’t take advantage of inside information, which Mr. Bowes said he didn’t. What was unusual, ethics experts said, was the frequency of his transactions, the high-stakes bets he sometimes made and the exotic securities he sometimes traded. On several occasions in 2018 and 2020, he bought and sold thousands of dollars of options on the same day.
“It is literally day trading,” Robert Rizzi, a partner at law firm Steptoe & Johnson LLP who advises government officials and nominees on financial disclosure, said after reviewing Mr. Bowes’s filings. “When they’re in the government, a lot of them don’t have time to do this, so it’s pretty amazing that he’s doing all this trading.”
Despite his investment activity, which continued into August of this year, Mr. Bowes listed no financial income, brokerage accounts or bank accounts on his year-end 2018 or 2019 financial disclosures.
In response to questions from The Wall Street Journal, Mr. Bowes said that he made a mistake on the 2018 filing and that his bank and brokerage-account balances at the end of 2019 were too low to require disclosure.
Mr. Bowes, 59 years old, had a decadeslong career in finance as a vice president at Chase Manhattan Bank and a director of counterparty risk at government-backed housing-finance giant Fannie Mae.
A staffer on Mr. Trump’s 2016 presidential campaign, Mr. Bowes was appointed senior adviser to HUD in January 2017 and has since held several positions within and outside the department, including stints as a policy adviser to Stephen Miller, a top aide to Mr. Trump, and in the Office of Personnel Management.
In August, Mr. Trump nominated Mr. Bowes to a seat on the five-member CFTC, a financial regulator that oversees derivatives markets and enforces laws against insider trading and fraud.
If he is confirmed by the Senate Agriculture Committee, Republicans can maintain their 3-2 majority on the commission until 2022, giving them the chance to block tougher financial regulations if Joe Biden wins the presidential election in November and appoints a Democrat to head the commission.
In his most recent role at HUD as director of faith-based initiatives, Mr. Bowes advocated a plan to shelter homeless residents of New Orleans on a Carnival Corp. cruise ship following the Covid-19 outbreak, despite being told by Housing Secretary Ben Carson to drop the idea, according to people familiar with the matter.
David Bottner, executive director of the New Orleans Mission, an evangelical Christian organization that supports the cruise-ship idea and hoped to manage it, said Mr. Bowes traveled to New Orleans a few months ago to discuss the plan with him. City officials were opposed to the idea, LaTonya Norton, a spokeswoman for the city said.
In June and July, Mr. Bowes reported 13 trades to buy or sell put options on shares of Royal Caribbean, a rival cruise operator.
Several of the transactions were valued at between $15,000 and $50,000, his disclosure forms show. Put options give the holder the right to sell shares at a predetermined price and are typically used by investors to bet against a company’s stock. It couldn’t be determined whether Mr. Bowes made a profit or a loss on those trades.
“HUD initially explored in May, June and July connecting the cruise-ship companies with the large homeless shelters operating in U.S. port cities,” Mr. Bowes said, without specifying whether this was his idea. He added that he hadn’t been involved in the plan since early July.
Mr. Bottner said Sept. 1 that he had last spoken with Mr. Bowes “a couple weeks ago,” telling the HUD official he had been unable to secure a berth for the vessel in New Orleans and that the plan’s chances of coming to fruition were diminishing.
Carnival didn’t comment. Royal Caribbean didn’t comment on Mr. Bowes’s trades but said it had been contacted by HUD earlier this year “about the possibility of using cruise ships for homeless housing. After preliminary inquiries, we decided it was not practical and we walked away from it,” company spokesman Jonathon Fishman said in an email, without providing additional details.
A HUD spokesman declined to comment on Mr. Bowes’s investment activity or the cruise-ship plan but said he is “a talented public servant who is more than qualified to handle the new job he is taking on.” A White House official said Mr. Bowes’s financial disclosure was cleared by the Office of Government Ethics before his nomination to the CFTC.
On March 26, 2018, Mr. Bowes bought 15,500 shares of Genworth Financial, a Richmond, Va.-based insurance company with a market capitalization of less than $2 billion. The stock closed that session at $2.88 a share, making Mr. Bowes’s investment worth about $45,000.
The following day, Genworth and Beijing-based financial-holding company China Oceanwide Holdings Group Co. agreed to extend a merger deal that was pending before a U.S. government panel, the Committee on Foreign Investment in the U.S., which reviews foreign investments.
On June 11, the first trading day after Cfius approved the merger, Genworth’s shares jumped 27% to $4.82. Mr. Bowes sold his shares on Nov. 8, when Genworth’s stock closed at $4.71, increasing the value of this stake by almost $30,000.
In a written response to questions about the trades, Mr. Bowes said he had no inside or advance information, and no knowledge of Cfius’s deliberations. He also disputed the notion that the bet was well-timed, without providing further details.
In October and November of 2018, Mr. Bowes bought between $53,000 and $145,000 of call options on shares of Bermuda-based shipping company Golar LNG, according to his disclosures. Call options give the holder the right to buy shares at a predetermined price.
He said in a text message to the Journal that he held the options until Jan. 3, 2019, when he sold them for about $41,000.
“I thought I had sold the GLNG call positions just before year end but instead sold them a business day or two later,” Mr. Bowes said in the text message. He said he has submitted a letter to HUD’s ethics officer to amend that form.
Other trades included dozens of bets on market volatility and the purchase of between $65,000 and $71,000 of shares in Gogo Inc., an in-flight internet provider with market capitalization of less than $1 billion. Mr. Bowes said in another text message that he sold those shares in 2018, though the transaction doesn’t appear in his disclosure forms. It couldn’t be determined whether Mr. Bowes made a profit or a loss on those trades.
Regulations require federal employees to disclose cash holdings above $5,000 and financial assets, such as stocks, worth more than $1,000. Mr. Bowes said his bank and brokerage balances were below those thresholds at the end of 2019. Money for his more recent trades, he said, has come from his bank account and income this year.
Mr. Bowes said his trading isn’t unusual and pointed to his career in finance.
“I was a fund manager,” he said in a text message. “I banked the securities brokerage industry. I have a 30+ year career covering large complex financial institutions.”
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