Senator Elizabeth Warren picked up where Senator Patty Murray left off this morning when it came to her time to question HHS nominee Rep. Tom Price on his investment habits, and specifically, his insider trading on health stocks.
To review, Tom Price, while a Representative, bought stock in a company called Zimmer Biomet. Price would have been quite familiar with Zimmer, since they are one of the largest manufacturers of medical devices for knee and hip replacements in the country, and he is an orthopedic surgeon.
Warren drilled right down to the core. Here's the exchange.
"Did you buy the stock and introduce a bill that would be helpful to the company you just bought stock in?," she asked.
Price stonewalled. "The stock was bought by a broker who was making those decisions. I wasn't making those decisions."
"You said you weren't making those decisions. Let me just make sure that I understand. they are listed under your name. These are your stock trades."
"They are made on my behalf.
"Was it purchased through an index fund?"
"I don't believe so."
"A mutual fund?"
"It's a broker-directed account."
"Through a blind trust? Let's just be clear. This is not just a stockbroker, someone you pay to handle the paperwork. This is someone who buys stock at your direction. This is someone who buys and sells the stock you want them to buy and sell."
"So when you found out --"
"That's not true, Senator."
"You decide not to tell, wink, nod, nod, and we're supposed to believe that."
After some more back and forth, Warren continued her march.
"Then I want to understand when you found out your broker had made this trade without your knowledge, did you reprimand her?"
"What I did was comply --"
"Did you sell the stock?:
Price hemmed and hawed about how he disclosed everything while Warren and Alexander bickered over time. Finally, she resumed.
"Your periodic transaction notes you were notified of this trade on April 4th, 2016. did you take an additional actions after that date to advance your plan to help the company that you now own stock in?," Warren asked.
Here she was getting to the fact that after purchasing the stock, he introduced legislation to help the company.
Price snapped back, "I'm offended by the insinuation, Senator."
Warren was ready. "You may be offended, but here's what you did. After you were personally notified of this trade, which you said you didn't know about in advance..you sent a letter to CMS calling to cease all future and planned mandatory initiatives under the Center for Medicare and Medicaid innovation and so there was no misunderstanding about who you were trying to help, you specifically mentioned hip and knee replacement."
Earlier in the day, Senator Patty Murray elicited answers from Price which clearly point toward some major insider trading on his part. Even though the media is downplaying it, it's a huge problem for Price. This particular exchange concerned a private placement purchase of a company by the name of Innate Immunotherapeutics. Private placements are investment offerings to private investors and usually require a minimum investment. Think of them as venture capital pooling where companies raise funds before going public.
Via Huffington Post, the exchange with Murray:
“You made the decision to purchase that stock, not a broker. Yes or no?” Murray asked at Price’s confirmation hearing.
“That was a decision that I made, yes,” Price said.
“You were offered an opportunity to purchase stock at a lower price than was available to the general public,” Murray said. “Yes or no?”
“I don’t know that it was,” Price responded. “It was the same price that everybody paid for the private placement offering.”
“Well, Congressman Chris Collins, who sits on President-elect Trump’s transition team, is both an investor and a board member of the company,” Murray said. “He was reportedly overheard just last week off the House floor bragging about how he had made people millionaires from a stock tip. Congressman Price, in our meeting, you informed me you made these purchases based on conversations with Representative Collins. Is that correct?”
“No, what I ―” Price started.
Murray interjected, “That is what you said to me in my office.”
Price responded, “What I believe I said to you was I learned of the company from Congressman Collins.”
“What I recall from our conversation was that you had a conversation with Collins and then decided to purchase the stock,” Murray said.
“No, that’s not true,” Price replied.
Murray pressed forward. “Well, that is what I remember hearing you say in my office,” she said. “In a conversation, did Representative Collins tell you anything that could be considered, quote, a stock tip? Yes or no?”
“I don’t believe so, no,” Price said.
Murray continued, “Well, if you are telling me he gave you information about a company, you were offered shares in the company at prices not available to the public, you bought those shares, is that not a stock tip?”
This is where Price explained that Collins told him about the company, but that he purchased stock after doing his own research. He said he participated in the private placement of stock in August.
Price instructed his broker to open a separate account from the one he ordinarily uses for stock trades in order to buy this particular stock after a conversation with another Congressman who now serves inside the Trump transition.
This is a very, very big deal. It's disqualifying, and organizations are already calling for Price to withdraw his nomination or worse, be prosecuted for insider trading.
Social Security Works director Nancy Altman issued this statement:
"Due to Rep. Tom Price's long record of seeking to dismantle Medicare, Medicaid, and Social Security, we have opposed his nomination for Secretary of Health and Human Services since it was announced. The hearing provided no cause for optimism on that front, with Price refusing to say if he would honor Donald Trump's pledge to protect these vital benefits. We also have been concerned that Mr. Price abused his public trust for private gain, lining his own pockets by buying big pharma stocks while co-sponsoring legislation to block a proposal to regulate those corporations. Today’s hearing did nothing to allay those concerns, either.
For all those reasons, we have called for Trump to withdraw Price's nomination, and for the Senate to vote Price down if that doesn't happen. But the new revelations that came to light in today’s hearing call for much more than that.
The hearing revealed that Price purchased stock, at a preferred price, based on what appears to be insider information. That raises serious legal questions. If Price has broken the law, he should be expelled from Congress. To determine whether he has, the matter should be immediately referred to the Securities and Exchange Commission and the Department of Justice for a thorough investigation and appropriate legal action.”