Ga. Sen. Perdue boosts wealth with well-timed stock trades
WASHINGTON (AP) - As the ravages of the novel coronavirus pushed millions of people off work, shops closed and the value of retirement accounts shrank, the Dow Jones Industrial Average fell to a three-year low.
But for Senator David Perdue, a Republican from Georgia, last March's crisis signaled something else: an opportunity to buy shares.
And for the second time in less than two months, Perdue's timing was flawless. Avoiding a heavy loss and making a staggering profit, he sold and then bought the same stock: Cardlytics, an Atlanta-based financial technology company that he once served on the board of directors.
On January 23, when it became known in Congress that the coronavirus was a major threat to the economy and public health, Perdue sold $ 1 million to $ 5 million worth of Cardlytics stock at a price of $ 86 each Share before it collapsed, according to data from Congress.
Weeks later, in March, after the company's stock continued to decline after an unexpected change in leadership and below-forecast earnings, Perdue repurchased the stock for $ 30 per share, investing between $ 200,000 and $ 500,000.
The value of these stocks has now quadrupled, closing Tuesday at $ 121 per share.
The Cardlytics transactions were just part of a multitude of investment decisions Perdue and other senators made in the early days of the pandemic. They caused public outrage after it became clear that some members of Congress had been briefed on the economic and health threats posed by the virus. The transactions were briefly mentioned in a story published by Intercept in May.
Now that Perdue is embroiled in a fierce re-election battle in a January 5 runoff, its business has become an issue in an already negative, costly campaign that will determine which, amid a public health and economic crisis Party controls the Senate.
There is no evidence that Perdue, who is among the wealthier members of the Senate, responded to information obtained as a member of Congress or through his longstanding relationship with corporate officials. It is illegal to use nonpublic information obtained as a corporate insider or a member of Congress to make investment decisions.
However, legal experts say the timing of his sale, the fact that he quickly repurchased Cardlytics stock when it lost two-thirds of its market value, and his close ties with company officials all warrant consideration.
"That seems suspicious," said John C. Coffee Jr., a law professor at Columbia University who specializes in corporate and securities issues. But he added, "You need more than suspicion to convict."
The Perdue campaign turned down a request for an interview with the senator. In a statement, Perdue spokesman John Burke said the senator had been cleared of wrongdoing but did not provide details.
"The Senate Ethics Committee, DOJ and SEC all independently and quickly clarified what was reported to Senator Perdue months ago," said Burke.
Perdue's opponent, Democrat Jon Ossoff, has picked up on his stock trading and tried to brand him a "crook".
Perdue is not the only senator in Georgia. Senator Kelly Loeffler, also a Republican, stands up against Democrat Raphael Warnock to complete the remainder of Senator Johnny Isakson's tenure.
Perdue's Cardlytics transactions fit into a broader pattern of stock movements he saw when the coronavirus first hit the US.
At the time, Perdue publicly claimed the economy was strong, praising President Donald Trump for "delivering the greatest economic turnaround in US history" during a February 24 interview on Fox News Channel.
However, a series of quick deals in his portfolio told a different story, showing that the Senator had dumped some company stocks while investing in others - such as protective equipment maker DuPont and pharmaceutical company Pfizer - that did well during the pandemic.
Perdue previously said that outside financial advisors do most of its business.
However, Donna Nagy, a law professor at Indiana University, said the nature of the agreement didn't prevent Perdue from instructing an advisor to conduct certain transactions. She said one way for members of Congress to avoid questions about their finances is to place them in blind trust, which Perdue did not.
"All of these questions about the motivations of our members of Congress and their personal securities trading could be alleviated if Congress passes legislation that limits investment," said Nagy, who specializes in securities law. "Ordinary citizens shouldn't have to ask members of Congress about their investments."
The issue was sufficient for a liability that Perdue abruptly sold between $ 3.2 million and $ 9.4 million of its stock portfolio over a four-day period in mid-April. This found an Associated Press review of the mandatory financial disclosures he submitted to the Senate. He didn't sell his shares in Cardlytics.
Still, Perdue has largely avoided the same level of control that some of his peers face.
North Carolina Republican Senator Richard Burr drew the most attention and stepped down as chairman of the Senate Intelligence Committee when he investigated his sale of over $ 1.7 million worth of stock while he privately owned some well-heeled voters warned of the virus publicly downplaying the threat.
Cardlytics works at the interface between banking and online marketing. It helps run rewards programs for financial institutions, including Wells Fargo, and uses data the banks have collected about their customers to market them - much like Facebook does with targeted ads.
The company did not respond to a request for comment.
After the turbulence in March, the share price recovered dramatically. Lynne Laube, the current CEO of Cardlytics, said the pandemic had a lot to do with it and sparked consumer interest in austerity programs.
"I hate to say this pandemic is playing in our favor, but it is playing in our favor," she said during a call for earnings in May.
Perdue acquired 75,000 shares of Cardlytics through stock options offered to serve on the company's board of directors from 2010 to 2014 when he resigned after winning his Senate seat, Securities and Exchange Commission filings show. The company, which had not yet gone public at the time, also offered him options that would be available in October 2020 and January 2022.
Perdue's latest financial statements do not indicate whether he exercised the options available in October.
However, according to Coffee, the law professor at Columbia University, this is an unusual move by the company.
"I've never seen options extended from 2014 to 2022," he said. "It's a very long extension."
While retiring from the company's board of directors, Perdue had ties to some of its executives who donated more than $ 30,000 to its political committees. According to records, donations to Perdue account for nearly 80% of all donations Cardlytics employees have made to federal candidates in the past decade.
Perdue has since used social media to promote the company. In August 2016, he took a tour of the office and posed for a photo with Laube and then CEO Scott Grimes, which he posted on Facebook. In the fall of 2019, he introduced Laube and Grimes at a gala in Atlanta where they received a Business Achievement Award.
Isakson, who served at Perdue, took steps to avoid the kind of control Perdue now faces. Isakson, a Republican, blindly entrusted most of his own holdings after some of his assets attracted unwanted attention in 2012.
"I said I have to be as obviously pure and open as anyone, and the best way to do that is with blind trust," said Isakson, who served on the Senate finance and ethics committees on the Atlanta Constitution Journal in 2017. "I don't know what I own."
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