Trump’s pick for Secretary of Health and Human Services, Rep. Tom Price, is under fire for allegations of potential insider trading. Several recent reports suggest Price traded medical stock while making decisions about legislation in Congress that directly impacted the medical industry.
And at his hearing before the Senate HELP committee on Wednesday, questions about whether Price made unethical and possibly illegal stock trades got even murkier.
Price told Sen. Patty Murray (D-WA) that he is personally involved in making some decisions about his stocks in the biotech field, and said he made a decision about purchasing stock in a company after talking to another member of Congress who sits on that company’s board.
His comments seem to contradict a defense the Trump transition team has offered to brush aside concerns about Price’s potential conflicts of interest.
Since 2012, Price has bought and sold stock in about 40 pharmaceutical, biomedical, and health care companies, according to the Wall Street Journal. In December, the Wall Street Journal reported that Price bought shares in the biomedical company Zimmer Biomet shortly before introducing legislation that would have directly benefited the company.
The Trump team has insisted that Price didn’t do anything wrong because his stock trades were directed by a broker, not by Price himself.
In her questioning of Price on Wednesday, Murray honed in on Price’s personal dealings with his investments. Murray asked about his involvement with Innate Immunotherapeutics, a small Australian biotech company.
“You purchased stock in a therapeutic company working to develop new drugs on four separate occasions between January 2015 in August 2016. You made the decision to purchase that stock and not a broker, yes or no?” Murray asked Price.
“That was a decision I made, yes,” Price said, indicating that he was involved in at least some of the decisions made surrounding his stock.
The questions about Price’s purchase of Innate Immunotherapeutics revolve closely on why Price chose to buy the stock, how much he paid for it, and in consultation with whom.
After his first purchase, Price bought additional stock in Innate Immunotherapeutics at a discounted price available to an undisclosed group of individuals, in what he called a “private placement offering.” Murray pressed him repeatedly on whether it was a lower price than that generally available. She also pressed him on why he chose to buy the stock.
“Congressman Price, in our meeting, you informed me you made the purchases based on conversations with Representative Collins, is that correct?” Murray asked Price.
“No — what I believe I said to you is that I learned of the company from Congressman Collins,” said Price. In response to repeated questions from Murray, Price said that he learned of the company from Collins, then researched it and decided to purchase shares on his own.
Collins, who also serves on Trump’s transition team, is a primary shareholder of Innate Immunotherapeutics. He also sits on the company’s board. There are questions about what reporters have characterized as “suspicious” stock activity. Last week, reporters overheard Collins bragging on his cell phone off the House floor about “how many millionaires I’ve made in Buffalo the past few months,” relating it to a stock tip.
One of Price’s purchases came two days after Collins made a significant investment in the company. He also made the purchases while Congress was debating the 21st Century Cures Act — which contains several provisions that could benefit experimental drug manufacturers like Innate Immunotherapeutics — one of them just “days before” Congress was set to vote on the bill, as Sen. Murray put it. Since its passage, share prices in the Australian company have nearly tripled.
“Do believe it is appropriate for a senior member of Congress actively involved in policy making in the health sector to repeatedly, personally invest in a drug company that could benefit from those actions, yes or no?” Murray asked on Wednesday.
“That’s not what happened,” Price said.
But Price essentially admitted to personally directing the trade of stocks in a company after talking to a fellow congressman who was on the board of that company. He bought some of his shares in the company at a lower than market rate. And he did so while Congress was debating legislation that could benefit that company.
Whether Price’s action was actually illegal — a violation of the STOCK Act, a law signed by President Obama that extends insider trading laws to members of Congress — hinges on what exactly Collins told Price about the company.
Price insists that Collins just alerted him to the company, and that he investigated and made the decisions to invest on his own. Democrats in Congress, however, are skeptical that that is the whole story.
“We need answers to this regarding whether you and Congressman Collins used your access to nonpublic information when you bought at prices that were unavailable to the public,” Murray concluded.
Throughout the hearing, Democrats continued to press Price on his stock habits, including a particularly heated exchange between Price and Sen. Elizabeth Warren (D-MA).
Even before Wednesday’s hearing, Democrats were calling for a more thorough investigation into Price’s possible ethical violations.
Sens. Al Franken (D-MN), Warren, and Tammy Baldwin (D-WI) asked HELP Committee Chairman Lamar Alexander (R-TN) to postpone Wednesday’s hearing so that they could have more time to dig into the allegations. Sen. Kirsten Gillibrand (D-NY) has also called for an SEC investigation over whether Price’s trades violate the STOCK act.
Yet despite repeated questions on the series of stock trades Price made in the health industry — and their suspicious timing — from Democrats on Wednesday, the HELP confirmation hearing did little to allay concerns about Price’s actions.
“This is another example of something that needs to be further investigated,” said Larry Noble, a lawyer with the Campaign Legal Center and former general counsel to the Federal Election Commission told the Huffington Post. “He himself has now said something that raises the question of whether he has violated the STOCK Act.”
“Public information doesn’t mean that one other person knows,” he added.
STOP THE PRESSES: this raises serious Stock Act and House Ethics issues. https://t.co/D8qV1T0n2e
— Norm Eisen (@NormEisen) January 18, 2017
At the end of the hearing, Murray again pressed Price on whether he personally directed a broker to make the trades in Innate Immunotherapeutics stock.
“You directed the broker to purchase particularly that stock,” Murray said to Price, who responded, “that’s correct.”
“Those answers commit me to underscore the need for a full independent investigation, and I would like to ask consent to enter a note that Congressman Price was offered a lower price than other investors,” said Murray.
An earlier version of this article identified the company as Innate Immunotherapies. It is Innate Immunotherapeutics. We regret the error.