01.23.17

Following Additional Concerns on Congressman Price’s Financial Transactions, Senate Democrats Call For SEC Investigation Into Potential Violations of STOCK Act and Insider Trading Laws

Congressman Price, nominee for Secretary of HHS, raised further concerns about his financial transactions at last week’s Senate HELP Committee hearing—LINK

 

In new letter, Senator HELP Democrats call on SEC for formal investigation  

 

Today’s letter follows several requests made by Democrats and government watchdog organizations for the Office of Congressional Ethics to investigate potential violations—LINK

 

Senate HELP Committee Dems: “The American people deserve a Secretary of Health and Human Services who works for their interests, not his own.”

 

(WASHINGTON, D.C.) Led by Senator Patty Murray (D-WA), Ranking Member of the Senate Health, Education, Labor, and Pensions (HELP) Committee, today Senators Bernie Sanders (I-VT), Sheldon Whitehouse (D-RI), Al Franken (D-MN), Tammy Baldwin (D-WI), Elizabeth Warren (D-MA), Tim Kaine (D-VA), and Maggie Hassan (D-NH) called on the U.S. Securities and Exchange Commission (SEC) to investigate the stock market trading activities of Congressman Tom Price (R-GA), President Trump’s nominee for Secretary of the Department of Health and Human Services (HHS). Recent disclosures about Congressman Price’s financial dealings raise serious questions about potential STOCK Act violations, illegal insider trading, and other conflicts of interest.

 

Democrats and the government watchdog organization Public Citizen have previously called for an investigation by the Office of Congressional Ethics (OGE) into these potential violations.

 

“In light of Republican efforts to advance this nomination without completing such an investigation  and given Rep. Price’s statements at his hearing last week that raise further concerns about his financial transactions – we believe it is necessary for the SEC to undertake a formal investigation into potential violations of both the STOCK Act and insider trading laws,” wrote the Senators in the letter. “It is clear through his financial disclosures that Rep. Price actively traded in multiple pharmaceutical and other health sector stocks while having access to a great deal of nonpublic information about pending health legislation and regulations.”

 

Today’s letter highlights Congressman Price’s involvement with Innate Immunotherapeutics, an Australian biotech firm, and the investments he made in the company after a potential recommendation from Congressman Chris Collins (D-NY), an Innate Immunotherapeutics investor and board member, who also served on President Trump’s transition team. Congressman Price’s financial disclosures reveal that although he maintained a Morgan Stanley investment advisory account, which he actively used since at least 2009, he appears to have opened a separate brokerage account for Innate Immunotherapeutics stock purchases in 2015.

 

Last week, Congressman Price appeared before the HELP Committee in connection with his nomination to lead the Department of Health and Human Services (HHS). In response to questioning at the hearing he confirmed:

 

  • he personally made the decision to purchase Innate Immunotherapeutics stock. 
  • he actively makes decisions on the investment account that contains Innate Immunotherapeutics stock.
  • he participated in a private offering not available to the general public.

 

The Senators concluded in the letter that: “Rep. Price’s investments raise a number of questions that merit investigation. We need to understand more about his conversations with Rep. Collins, his personal decision to purchase Innate Immunotherapies stock, and his accepting a discounted rate for this stock purchase.”

 

The full text of the letter is below and HERE:

 

January 23, 2017

 

U.S. Securities and Exchange Commission

100 F Street NE

Washington, D.C. 20549

 

Dear Commissioners:

 

We write to request an investigation of the stock market trading activities of Representative Tom Price, President Trump’s nominee for Secretary of the Department of Health and Human Services. Recent disclosures about Rep. Price’s financial dealings raise serious questions about potential STOCK Act violations, illegal insider trading, and other conflicts of interest. Democrats and the government watchdog organization Public Citizen have previously called for an investigation by the Office of Congressional Ethics.  In light of Republican efforts to advance this nomination without completing such an investigation and given Rep. Price’s statements at his hearing last week that raise further concerns about his financial transactions – we believe it is necessary for the SEC to undertake a formal investigation into potential violations of both the STOCK Act and insider trading laws.

 

The Stop Trading on Congressional Knowledge (STOCK) Act, passed in 2012, prohibits Members of Congress and other government employees from using nonpublic information derived from that individual’s official position as a means of making a private profit.[1]  The STOCK Act also prohibits Members of Congress from purchasing securities that are the subject of an IPO “in any manner other than is available to members of the public generally.” 

 

Members of Congress and government employees are also prohibited from engaging in illegal insider trading, the act of buying or selling a security, in breach of a fiduciary duty or other relationship of trust and confidence, while in possession of material, nonpublic information about that security.[2]  Insider trading violations also include “tipping” such information or securities trading by the person “tipped.”  Unlike STOCK Act violations, insider trading violations are not necessarily derived from the inappropriate use of an individual’s official position.

 

It is clear through his financial disclosures that Rep. Price actively traded in multiple pharmaceutical and other health sector stocks while having access to a great deal of nonpublic information about pending health legislation and regulations.  The American people deserve a Secretary of Health and Human Services who works for their interests, not his own.

 

Rep. Price’s dealings in Innate Immunotherapeutics highlight the need for a thorough, independent investigation before his nomination advances further.  Rep. Price’s financial disclosures reveal that he first purchased stock in Innate Immunotherapeutics in January 2015.  In a hearing before the HELP Committee last week, Rep. Price confirmed he learned of Innate Immunotherapeutics from Rep. Chris Collins, an investor and board member of the company who served on President Trump’s transition team.  Rep. Price made three separate purchases in January 2015, totaling approximately $10,000.  Although Rep. Price maintained a Morgan Stanley investment advisory account, which he actively used since at least 2009, he appears to have opened a separate brokerage account for his Innate Immunotherapeutics purchases.[3] 

 

In August 2016, Innate Immunotherapeutics offered a 12 percent discount to “sophisticated U.S. investors” in an effort to raise money.[4]  Rep. Price purchased between $50,000 and $100,000 of stock during that time.[5]  Just two days earlier, Rep. Collins purchased between $500,000 and $1 million in Innate Immunotherapeutics stock. 

 

In November 2016, Rep. Price voted for final passage of the 21st Century Cures legislation, reversing his previous opposition to the legislation.  Innate Immunotherapeutics stands to benefit from the law, given its plans to seek FDA approval for treatment of multiple sclerosis (MS) patients. 

 

Last week on January 19, 2017, Rep. Price appeared before the HELP Committee in connection with his nomination to lead the Department of Health and Human Services (HHS).  In response to questioning at the hearing he confirmed:

 

  • he personally made the decision to purchase Innate Immunotherapeutics stock. 
  • he actively makes decisions on the investment account that contains Innate Immunotherapeutics stock.
  • he participated in a private offering not available to the general public.

 

Rep. Price’s investments raise a number of questions that merit investigation.  We need to understand more about his conversations with Rep. Collins, his personal decision to purchase Innate Immunotherapies stock, and his accepting a discounted rate for this stock purchase. 

 

We urge you to immediately begin an investigation of Congressman Price’s trading activities to ensure he has not acted in violation of the STOCK Act and insider trading laws. 

 

Sincerely,

 

###

 



[1] https://www.govinfo.gov/content/pkg/PLAW-112publ105/pdf/PLAW-112publ105.pdf

[2] https://www.sec.gov/answers/insider.htm

[3] http://clerk.house.gov/public_disc/financial-pdfs/2015/9109866.pdf

[4] https://www.statnews.com/2017/01/13/tom-price-innate-immunotherapeutics/

[5] http://clerk.house.gov/public_disc/ptr-pdfs/2016/9110002.pdf