“For the second time in less than two months, Perdue’s timing was impeccable. He avoided a sharp loss and reaped a stunning gain by selling and then buying the same stock”
“Perdue’s Cardlytics transactions fit into a broader pattern of stock moves he made when the coronavirus first struck the U.S.”
“Donna Nagy, an Indiana University law professor, said that type of arrangement doesn’t preclude Perdue from directing an adviser to make specific transactions.”
Atlanta, Ga. — Today, new investigative reporting by the Associated Press exposes how Senator David Perdue (R-Ga.) saw a “stock buying opportunity” as the economic and public health crisis escalated in Georgia, using “impeccable” timing to avoid sharp losses and instead turn a “stunning gain.”
Perdue, who received a massive “sweetheart” deal after leaving the board of Cardlytics, a financial technology company in Georgia, sold stock in the company just as news of the impending pandemic spread through Congress and directly before shares tanked on the market. Just weeks later, however, Perdue repurchased shares at a fraction of the cost. They are now worth four times the original purchase price.
Legal experts branded Perdue’s transactions as a sitting U.S. Senator “suspicious,” noting that his timing, profit, and close ties to company officials “all warrant scrutiny.”
The revelations come less than a week after The Daily Beast uncovered Perdue’s “conspicuously timed trading” as Chairman of the Senate Seapower Subcommittee. Perdue has been under fire for his controversial stock trades all year.
While Perdue was busy attending to his stock portfolio, he maintained the risk to Georgians’ health was “low,” the economic impact would be “little,” and even compared the pandemic to the “common flu.”
Read key excerpts from AP’s report below.
- As the ravages of the novel coronavirus forced millions of people out of work, shuttered businesses and shrank the value of retirement accounts, the Dow Jones Industrial Average plunged to a three-year low.
- But for Sen. David Perdue, a Georgia Republican, the crisis last March signaled something else: a stock buying opportunity.
- And for the second time in less than two months, Perdue’s timing was impeccable. He avoided a sharp loss and reaped a stunning gain by selling and then buying the same stock: Cardlytics, an Atlanta-based financial technology company on whose board of directors he once served.
- On Jan. 23, as word spread through Congress that the coronavirus posed a major economic and public health threat, Perdue sold off $1 million to $5 million in Cardlytics stock at $86 a share before it plunged, according to congressional disclosures.
- Weeks later, in March, after the company’s stock plunged further following an unexpected leadership shakeup and lower-than-forecast earnings, Perdue bought the stock back for $30 a share, investing between $200,000 and $500,000.
- Those shares have now quadrupled in value, closing at $121 a share on Tuesday.
- The Cardlytics transactions were just a slice of a large number of investment decisions made in the early days of the pandemic by Perdue and other senators. They stirred public outrage after it became clear that some members of Congress had been briefed on the economic and health threat the virus posed. The transactions were mentioned briefly in a story published by The Intercept in May.
- But legal experts say the timing of his sale, the fact that he quickly bought Cardlytics stock back when it had lost two-thirds of its market value and his close ties to company officials all warrant scrutiny.
- “This does seem suspicious,” said John C. Coffee Jr., a Columbia University law school professor who specializes in corporate and securities issues.
- Perdue’s Cardlytics transactions fit into a broader pattern of stock moves he made when the coronavirus first struck the U.S.
- At the time, Perdue publicly maintained that the economy was strong and praised President Donald Trump during a Feb. 24 interview on Fox News Channel for “executing the greatest economic turnaround in U.S. history.”
- A series of swift transactions in his portfolio told a different story, however, showing the senator dumped some company stocks, while investing in others — like protective equipment maker DuPont and pharmaceutical company Pfizer — that were poised to do well during the pandemic.
- But Donna Nagy, an Indiana University law professor, said that type of arrangement doesn’t preclude Perdue from directing an adviser to make specific transactions. She said one way for members of Congress to avoid questions about their financial holdings is to put them in a blind trust, which Perdue has not done.
- “All of these questions about the motivations behind our members of Congress and their personal securities trading could be alleviated if Congress passed a law that limited investments,” said Nagy, who specializes in securities law. “Ordinary citizens should not have to question members of Congress about their investments.”
- The issue was enough of a liability that Perdue abruptly sold off between $3.2 million and $9.4 million of his stock portfolio over a four-day period in mid-April, according to an Associated Press review of mandatory financial disclosures he has submitted to the Senate. He did not sell his stock in Cardlytics.\
- After the March turmoil, its share price dramatically rebounded. Lynne Laube, Cardlytics’ current CEO, said the pandemic had a lot to do with it, driving consumer interest in savings programs.
- “I hate to say this pandemic is playing in our favor, but it’s playing in our favor,” she said during an earnings call in May.
- Perdue acquired 75,000 shares in Cardlytics through stock options offered for his service on the company’s board from 2010 to 2014, when he stepped down after winning his Senate seat, Securities and Exchange Commission filings show. The company, which at the time had not yet gone public, also offered him options that would become available in October 2020 and January 2022.
- But according to Coffee, the Columbia University law professor, it’s an unusual move by the company.
- “I’ve never seen options extended from 2014 to 2022,” he said. “That’s a very long extension.”
- While Perdue left the company’s board, he has maintained ties to some of its executives, who have donated more than $30,000 to his political committees. Donations made to Perdue account for nearly 80% of all giving to federal candidates by Cardlytics employees over the past decade, records show.
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